Business loans are short-term debts which a company avails to meet up the small business requirements of working capital, expansion plans, procuring new machinery or inventory and for certain unforeseen emergencies. Apart from established banks, various other lenders in the market can help you with these types of financial requirement. To connect to some of the reliable lenders, you can visit www.lendgenius.com. Some of the best comparisons between various loans available based upon the interest rates, credit offered etc. are available on www.moneyadviceservice.org.uk which may help to make the final decision.
Thera is a certain requirement which needs to be taken care of to get eligible for getting a small business loan:
1. To attain business credit score, certain parameters are considered to determine the credit score like payment history, current balance owed on credit cards or payments pending, other debt availed by you, and time duration for which you had credit. Usually, the credit score ranges between 300 to 850, higher the score better and easier to get the loan sanctioned. Paying the bills on time would add points to the credit score, any fraudulent practice can reduce your chances of getting an SBA loan at least from an established bank. Online lenders are sometimes lenient in this regard.
2. The eligibility criteria of the lender: Apart from credit score there can be other deciding factors which the lender would like to evaluate. This may include the years of existence of the business, Annual Revenue generated and the profits earned. Also, your nature of business should not be on the ineligible list of business for loans which includes life insurance, banking or real estate business.
3. Legal documentation: Some mandatory list of documents need to be furnished to get eligible for the sanction of loan. They include business and individual income tax return for a defined period of years, balance sheet and income statements, commercial and business license copy, Incorporation paperwork, bank statements and financial plan and forecasting figures in case the business is a new setup.
4. Provide a guarantee or collateral: The company needs to furnish collateral and a personal guarantee from an owner who has a share of more than 20% in the company. In case of anyone defaulting in paying back the loan with interest, this guarantee can be used to seize or sell the company property to compensate the unpaid amount.
5. Business plan: It is important to make the lender believe in the business plan and forecast which the loan seeking business entity submits. This business plan gives a detailed view of the company work model, product and services offered, operational plans intended marketing strategies and forecast which the company wants to achieve by using the funds generated through the sanction of the loans.
With the availability of multiple options of loan offered in the market, one should take this opportunity to enhance the business financially and technologically. Some of the benefits of small business loans are: There is flexibility to choose from different types of loans like a working capital loan, term loan, overdraft option. The repayment plans can be modified as per the variation in financial capabilities of the borrower. Other charges like the commission, processing fee, and interest rates are nominal.