Obtaining a small company loan is a significant barrier facing small companies, mainly as a result of tight lending criteria by banks. But getting outside financing is often required to start or grow a business or cover daily expenditures, including payroll and stock.
Choose which type of loan is ideal for you.
If you are starting a business, it is practically impossible to find a loan in your organization’s first year. Lenders require cash flow to support repayment of the loan, so startups are generally immediately disqualified from funding.
Alternatively, you’ll need to rely on company credit cards, borrowing from family and friends, crowdfunding, private loans or a microloan from a nonprofit lender.
You may get small-business loans from several areas, including banks, nonprofit microlenders and online lenders. These lenders provide products such as term loans, lines of credit and accounts receivable funding.
As soon as you decide which type of lender and funding model is appropriate for you, compare a couple of similar choices based on the annual percentage rate (total borrowing cost) and provisions. Of the loans you qualify for, choose the one with the lowest APR, so long as you can deal with the loan’s regular payments.
Now, gather your files.
As soon as you’ve compared your choices, it is time to apply for the loans that match your financing needs and that you qualify for.
You may apply for multiple small-business loans in a brief time frame (approximately two weeks) with no negative impact on your personal credit rating.