Business Finance Advice:
Is It Time To Apply For A Small Business Loan?
Small businesses either use their cash flow to grow their business or borrow money when the time is right to expand. What many owners have learned to their chagrin is that even if they got a business loan for all the right reasons, if the timing was wrong that good loan can quickly become a bad one. To determine if it is the right time for your business to get a loan, ask yourself the following three questions.
1. Is my business in a good enough situation to handle making the repayments on a business loan?
If you went looking for sound business finance advice, you’d be asked why you needed the loan in the first place. Are you consolidating debt to make it more manageable? Do you have a well-developed business plan in place to expand your business with the loan money?
Even if you have good answers to these questions, you have to take a look at your business credit rating. New businesses often haven’t built up any credit and should start there before taking out a loan at a higher interest rate. Business loans are difficult to get and you want to make sure that you are in a good position before seeking additional financing.
2. Is there a loan product out there that fits your business needs?
The world of lending has changed dramatically in the past few years. Loans are no longer cookie cutter packages. Instead, loan officers increasingly are tailoring the loans they offer to the business type and business need.
Spend time doing your research before applying for a business loan like equipment finance or a loan for business expansion. It’s important to get a loan that isn’t too large or too small for your needs and that meshes well with the normal fluctuations of your business’s income. Check the criteria required as well, before you head to the lending institution.
3. What kind of shape is your business credit report in?
Even though your credit standing was listed as part of the answer to question one, it is important enough to mention again. Check with the three credit reporting institutions and have each of them send you a copy of your report. This will give you a good idea of which types of business loans you will qualify for. Sound business finance advice always includes maintaining the best credit score possible.
However, opportunities for business expansion don’t come along every day. Even if your credit is less than stellar, it may be worth your well to head to a lending institution with your business expansion plan in hand. Business owners may be able to convince the lending officer that their plan is worth the risk. You may need to make concessions such as a shorter payoff period or a higher interest rate.
Small business loans are available. Lenders generally require a great deal of information about your existing business and the purpose of the loan. In addition, the better your credit rating, the better your chances will be to get the business loan you are requesting.
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