It is not that easy for the small business owners to obtain small business loan. Private lenders and banks need businesses to go through some complicated and strict financial procedures with strict needs for qualification. After the whole thing, the approval for credit is not even guaranteed.
It’s a fact that financing for the loans supported by SBA (or Small Business Administration) cannot meet the requirements of a majority of small businesses. Though the total amount of the credit available for the small businesses has increased to about 25 percent but it is not that easy to avail the small business loans till now.
It is important for the small businesses looking for small business loans to know how to create the right type of business plan that financial institutions are in search of. To justify their request for loan, they must be able to show in detail how they plan to use the loan amount in business and how viable their loan plan is.
Most loan experts suggest that the lenders include certain specific points that they use to scrutinize applications for. Moreover, the applicants must know all these points in order to tailor their submitted business plans in view of that.
It is also advised that the loan applicants must first establish a strong relationship with that of the lending bank so as to improve the likelihood of having the loan approved. The financial institutions or banks offer more small business loans to the businesses that have already known as well as trusted for a long term. Since most small businesses are start-ups or new businesses, this is somewhat difficult to do and cannot be done in a jiffy.
However, small businesses those applying for the small business loans must have a good credit score. A small business must first be deemed credit worthy by the financial institution before it can well be considered for the loan approval. In addition to this, small businesses first need to prove that they are at least 2 years old and are both viable and struggling at the same time.
Small businesses looking for loans must present a proof that has had positive cash flow in one of those previous years in business. They must, however, be presently struggling with the immediate financial hardship with an income decrease which must not be less than twenty percent. Additionally, they must submit their projections for the cash flow for about next two years proving they will be able to meet all the loan payments.
One of the faster ways to obtain small business loan would be through the credit card services. Most small business have their credit card services enabled in order to accept the customer payments for the goods and services via the debit or credit cards, whether through the phone or online or over the counter in the brick and mortar setting.
Being able to obtain payments through the debit or credit cards can highly enhance the small business income earning potential. In addition to this, the credit card services can even offer equivalent of the small business loans with no requirement for any security or collateral.
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