For many small businesses, there comes a time when they need a small business loan to remain in operation. However, there are numerous options for financing and, as a business owner, you need to be sure that the lender you choose is the best. The following are some tips you can use as you search for the most appropriate lender.
Gather all the important financial documents of your business
All lenders, be they traditional lenders or alternative lenders will assess the financial position of your business before they approve your loan. Therefore, before you apply for the business loan, you would do well to gather all the relevant business financial documents in order for the application process to be smooth.
As soon as you settle on a lending option and decide to make an application, gather all the required information, including your employer identification number (EIN), taxpayer ID, income statements, ownership information, and other business information.
Traditional banks generally require three or more years’ worth of information, whereas alternative lenders typically require information for a single year. Whichever lender you choose to engage, the more information you gather, the quicker and more streamlined the application process will be.
Educate yourself on all the available options
By carrying out adequate research on business loans, you will find that traditional banking institutions are not the only source of financing for small businesses. There are a number of alternative lending options, each offering various types of lending solutions.
Needless to say, different lending solutions—such as traditional bank loans, Small Business Administration (SBA) loans, merchant cash advances, credit card factoring, invoice factoring, and business lines of credit—are suitable for different businesses at different times. Conduct adequate research to determine which option suits your business best.
It is important to note that alternative lenders, such as libertylending.com, are more likely to approve your business loan than traditional banking institutions, especially if you have a less than exemplary credit rating and your business hasn’t been in operation for long. Reports show alternative business lenders approve close to half of all applications compared to the approximately 30% approval rate of traditional banking institutions.
Choose a lender that will provide adequate financing
While you may believe that your business is financially healthy and is performing well per your assessment, not every lender will be willing to provide all the funds you require to scale your business. Take time to determine your financing needs and look for lenders that can not only offer the required amount, but also match your needs.
Take into account how quickly you need the funds
When your business is in urgent need of cash, you need to find a lender that can act fast. Traditional lenders, such as banks and the SBA, take weeks or months to approve your loan, and in most cases equally as long to release the funds. If you need money fast, alternative lenders are your best bet as loans can be approved within 24 hours and funds released within 48 hours.