There are myriad of reasons individuals take out loans on a daily basis, one of which is the small business man or woman in need of some financial assistance.
With that in mind, getting the right small business loan at the right time can mean the difference between success and ultimately having to close one’s doors.
If your small business has been struggling coming into 2016, the time might be right for you to explore the various small business loan possibilities that are out there. In doing so, you can pinpoint which loan best fits your financial and business goals needs.
So; where best to start the process?
Do Your Homework
To begin with, you want and need to make sure you research each and any loan provider you think of possibly doing business with.
Among the factors to look at:
- Time in business – How long has each business loan provider you are looking at been in business? Even though a newer provider may perfectly fit your small business loan needs, you still need to vet them. Look to how find out when they started their business, what their long-term business plans look like, and approximately how many customers they have signed-up since going into business;
- Customer service initiatives – Always remember that the loan provider works for you, not the other way around. From tips to get the best personal loan rates to answering all your questions, you want a company that provides you with top-notch customer service, just as you are hopefully giving to your customers. Some providers will put you in touch with an even higher loan if you qualify. Typically, you should not borrow a greater amount than you need. That said it behooves small business owners at times to borrow more, wherein those individuals can receive a lower interest rate. No matter what amount you are striving for, it helps to utilize a loan calculator to zero-in on the best figure;
- Credit scores – Unless you have been under a rock for the last decade or more, you know that many more companies are looking more at individual of credit scores. The scores can guide a loan provider, insurance company, credit card company and countless others as to how much or how little of a loan risk someone is. With that in mind, make sure you know your credit score before applying for a small biz loan. In the event your score is nothing to brag about, why is that? If you have accumulated debt over the years, been late with a few payments or opened and closed too many credit card accounts, your score is likely to have taken a direct hit. Be able to explain away why your credit is what it is, though it is also important to note that even with a poor credit score, you are not totally discounted from receiving a loan;
- Know your finances – Last but certainly not least, make sure you have a firm understanding of your business finances. Some small biz owners will hire an accountant and/or H.R. person to oversee client invoices, company expenditures etc. Others, meantime, will try to juggle all those numbers on their own, this while still trying to run the business effectively. No matter which road you travel down, it is important that you know your financial situation, be it good or bad. Unfortunately, some smaller company owners are so busy juggling myriad of tasks that they take their eyes off the big elephant in the room, how much money is coming in from paying customers and how much is going out in terms of supplies, employee salaries, marketing and advertising needs, utilities and property taxes when renting office space etc. Before you even go online, pick up the phone or step in a loan provider’s office, you’ve got to understand just what your company’s financial situation is.
As noted in a HuffingtonPost.com piece, lenders generally look more favorably upon those small business owners who have a proven track record.
With that being the case, put your best foot forward when applying for a small biz loan, even if you’re a little wet behind the ears when it comes to running a small company.
About the Author: Dave Thomas covers small business topics on the web.