As a business owner you may require financing to boost cash flow, buy new equipment or expand your operations. Through a business loan, you take out a loan and pay it back over time, paying interest. Depending on the type of business loan that you select and the lender you choose, there can be different terms and requirements, including whether or not it is secured, and if you need a personal guarantee. If you wish to increase your chances of getting approved, you should apply to a lender who will consider your business’s financial health and your personal credit score and past.
Check the total cost, including the annual interest rate, fees and penalties. It is also important to determine whether the loan is secured, which usually requires collateral, like inventory, real estate or assets. Unsecured business loans, on the contrary, does not require collateral, but is subject to higher interest rates.
All lenders will examine your credit scores before approving your application for the loan, and a few will also consider your business plan and other documentation in the application process. When you apply for loans, it is essential to have the documentation ready to submit it in a timely manner. This can include your personal and business tax returns as well as bank statements, and cash flow projections. Some lenders provide expedited processing to those who are eligible to borrow.