Pay attention to any required credit score. Qualifying for a small business loan often means you need good credit, especially if your business is young or does not have a lot of employees. For a merchant cash advance, you’ll likely need to provide proof of your monthly and/or annual revenue. With a bank, you may be asked to provide financial statements with your small business loan application. Once you accept you can expect funds in your account within hours, or up to a couple of days depending on the lender.Įligibility for different types of small business financing will vary. Some financing sources may require you to use some of the proceeds to refinance other debt. Once you are offered financing you’ll want to read the loan documents carefully to make sure you understand the terms of the financing, including daily or monthly payments, the cost of the financing and whether a personal guarantee is required. Expect more back and forth, greater scrutiny, and a longer wait before you get a decision. They will then request any additional documentation so they can underwrite the loan and make an offer.īanks tend to take longer to approve loan applications, and a lot more documentation may be required. Online lenders can typically offer a preliminary decision very quickly. Once you have submitted the required documentation, the financing company or lender will make its decision. For loans with collateral, such as equipment or real estate, you may need an appraisal. For example, for invoice factoring you may need to supply an accounts receivables (A/R) aging report that shows your outstanding invoices. Some types of financing may have other requirements. Increasingly though, lenders will ask you to link your business bank account so they can analyze your business revenues to determine if you meet their requirements. Some lenders will allow you to provide copies of recent bank statements (3-6 months is typical) or business tax returns plus up-to-date financial statements. Some lenders will also check business credit scores. Oftentimes a personal credit check is a “soft” credit check that doesn’t impact your personal credit scores, but if you’re concerned about this be sure to ask. Not all financing offers will involve a personal credit check but many will. If you don’t have a prior relationship with the lender you will likely need to supply a driver’s license or passport to verify your identity. If you are an unincorporated business (sole proprietorship) you may use your Social Security number or Taxpayer Identification Number (TIN) but it’s a good idea to request a free EIN from the IRS.
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