The small business loans category in today’s marketplace has expanded in order to meet the needs of twenty-first century entrepreneurs. Innovative technologies are all but necessitating a changing of the guard, so to speak, in terms of how wares are bought and sold through a variety of mediums. Although the way business is being done these days carries with it a variety of nuances, many mortgage lenders are still using the same old formula to qualify their prospective borrowers. Whether seeking a construction loan or looking to enhance business operations or both, the requirements for getting approved on a variety of small business loans are relatively consistent across the board.Loan applicants may want to find out as much as they possibly can before delving into the multi-faceted world of business, such as how mortgage rates today will play a role in the here and now, but down the road as well. Commercial loan rates, for example, are often a few percentage points higher than home loan rates, as well as the duration of each loan in question.While much of this information can easily be found elsewhere online, contacting a reputable broker and having a real-time conversation may help to clear up any confusion, yet it’s also a great way to find out exactly what is needed to apply for one or more small business loans. Finding a trusted broker is often one of the most important steps of the borrowing landscape as the screening process moves forward.Also known as liaisons to a variety of mortgage lenders, brokers are the ones who will be able to shop the loan requests around to see how they stack up by comparison. Before doing so, a number of puzzle pieces should already be in place, such as documented financial information: personal and business finances over the last three years, tax returns, and a respectable credit history as well. Small business loans are also approved or denied based on the viability of each proposed business model, meaning that a water-tight or virtual recession proof modus operandi may increase the chances of getting the green light.The above requirements will be part of a business portfolio that should also include the amount of the loan and a few industry-related projections accordingly. Depending on the type of commerce entailed, demographics may play an important role as well.A retail-based construction loan application, for example, will require specific data concerning targeted area populations and age groups, foot traffic, median incomes, projected costs, and expected turnaround times. When it comes to small business loans, a well-laid-out plan stands a greater chance of coming to fruition.With standard mortgage rates today remaining competitive, the amount of the initial down payment can also lower commercial loan rates significantly. While the same principle applies to a number of individual home loan rates, the savings on a commercial level can make a sizable difference.It’s also important to note that putting a larger sum of money down often signifies the type of drive and determination many mortgage lenders like to see in their prospective clients. Small business loans such as these are likely to become profitable over shorter periods of time; as the commercial loan contract eventually reaches maturity, other financial incentives are likely to appear.Covering all of the bases can never be overstated when applying for a construction loan, or any other start-up business that requires additional capital. When executed methodically and properly while planning ahead for possible snags, the hard work waiting in the foreground may become less of a burden. While finding the lowest commercial loan rates possible may be a key factor, getting established may be the most important thing of all. The small business loans model of today is designed to help loan applicants reach their intended goals.
Small business owners are some of the most hard working and knowledgeable people on this planet. They have big dreams and nothing can get in their way. One fall back for such a driven and motivated person is that often times, certain operational functions are not carried out correctly. Because small business owners want to move swiftly, certain details can often be overlooked, causing the business to not run as smoothly as we all want it to.Applying for business loans is one of those operational functions that small business owners just can not seem to get their arms around. Here are a few tips on some of the things you should not do when applying for business loans.Number 1 – Banks and lending institutions have no interest in taking on any kind of risk whatsoever. The recession has spooked lenders to not lend out money to anyone, or any business that does not have exactly what they are looking for. In knowing this, it is important to understand what the banks’ underwriting guidelines are. Do not be intimidated by the bank or its loan officers. Once you understand how their processes and guidelines work, it is easy to entertain those processes and guidelines. Ask the bank what it will take to be approved for the particular business loan you are looking for. Do they want a certain personal credit score? Do they require a good business credit score? Do they require you to be in business for so many years? Once you have found out what those guidelines are, you can go back and work on falling within those guidelines. Do not walk into a bank and apply for a business loan without first knowing what their underwriting guidelines are.Number 2 – Your credit score is one of the biggest factors determining whether or not you are going to be approved for business financing. Many banks are going to require that you have a decent personal credit score along with a good business credit score. Yes, the two scores are different. Before applying for financing, you need to check both your personal credit score along with your business credit score to make sure they are what you think they are. Applying for a business loan without knowing what those scores are is a big risk. There is nothing worse than applying for a business loan and being turned down because you thought you had a 700 credit score and you really had a 620. This will also affect your future chances of being approved for a business loan with any other bank or lender. Once you have been denied by three banks, you are most likely going to be denied by all other banks because your credit score has been checked too many times in such a short period. Do yourself and your business a favor and know your own numbers before anyone else does.Number 3 – There are two facts that many small business owners fail to see in our current economy. Number one is that nearly every small business owner in this country is starving for money, which means there are thousands of small business loan applications sitting on loan officers’ desks. Number two, loan officers are paid on commission, which means they are only paid when a loan has been closed. If we know these two facts to be true, then it is vitally important to have a very well assembled loan package. If you give the loan officer any excuse whatsoever to have to find more information on your business, your loan application is going right in the trash. Loan officers want to be paid, which we know only happens when a loan is closed. In this economy, loan officers are only going to spend their precious time on loan applications that they know are easy to close. Your loan application has to be prepared with everything the bank wants to see when applying for a business loan. This includes a well written business plan, professional looking financial documents, articles of incorporation, and good personal and business credit scores. If you have these documents, do not put them all in a shoe box and walk into the bank. Organize them neatly and professionally so the banks perception of your business is a positive one. Do not think you are going to be approved for a bank loan or line of credit without being prepared.In conclusion, think about the banks money as your own hard earned money. Would you lend out money to a business owner that does not have what is required to own and operate a low risk, positive cash flowing business? No, probably not. Put yourself in the banks’ shoes and think about what you would want to see. The more prepared you are when applying for business financing, the better your chances of getting approved for business financing.