Guide to Typical Small Business Loan Requirements
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What Is a Business Loan?
Why Get or Avoid Getting Business Loans
Why Do Business Loan Lenders Have Requirements?
What Business Lenders Look at:
1. Credit Score
3. Debt-to-Income Ratio
4. Business Plan
6. Time in Business
8. Bank Statements
9. Business License and Permits
10. Loan Amount
11. Loan Purpose
12. Down Payment
13. Other Factors
Your personal and business tax returns Accounts receivable and balance sheets Proof of collateral Copy of your commercial lease Disclosure of other debt Legal contracts and agreements
How to Increase Your Chances of Getting a Small Business Loan
Put up collateral. By offering collateral, you lower the risk for the lender. While it's not a guarantee, it can increase your chances of getting a loan approval. Pay off your debts. If your DTI is high, it indicates to a lender that you're using a lot of your income to pay off other loans. That's a sign of risk for any lender, so it can be a good idea to pay off some of your other debts before applying for a loan. Work on building a better credit profile. The minimum credit score needed to qualify for a business loan will vary by lender. But, generally, the stronger your personal and business credit, the higher your chances of getting approved for a business loan. Choose the right lender. Not all lenders have the same requirements. If you have thin or poor credit, for example, you will likely stand a greater chance of getting approved for a business loan with an alternative, online lender than with a traditional bank. Wait a year or so. If your business hasn’t been around for at least two years, you may want to hold off applying for a loan and put your efforts into building a strong foundation for your business and increasing your revenue. This will make it likely that you’ll be approved for a loan in the future.
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