If you are planning to establish your own business or innovate your existing business, consider the amount of money that you will need to formulate these goals in the future. In terms of getting funds for your business, why not consider applying for a small business loan? Seeking for potential lenders is essential, but you need to have a clear vision to your business ventures so they can help you with your needs.
Here’s some information to help you convince potential lenders to give you the right small business loan for your business.
1. Set your business goal
For those who are planning to start their businesses, prepare your business plan. You must be specific enough in telling a potential lender on how you will use the money to your business and how will you pay them.
For those who want to innovate their businesses, you need to be clear with your business plan. Tell lenders that you will use the money to upgrade your equipment or to add more products or services.
Just make sure to prepare your annual sales for existing business owners and financial details for aspiring business owners.
2. Qualifications for small business loan
In applying for a small business loan, you must review your personal and business credit reports properly. Personal reports are essential for lenders because they need to look for a loan in case the business is unable to repay. Business credit reports consist of information from the vendors and suppliers regarding their existing transactions.
Once you check and correct any errors on your reports, seek for the improvement of your score by telling your vendors or suppliers that aren’t listed to report your payments. For existing debts, try to pay it down and maintain your balances low. If there are discrepancies to your credit reports be sure to explain it to the lender.
3. Prepare financial documents
Banks usually ask for business and personal tax returns. They might also review balance sheets, income statements, cash flow projections and other financial statements. Marketplace lenders require a more streamlined application process but with less documentation.
You might want to consider putting a collateral to your business loan. Usually traditional banks and marketplace lenders ask borrowers to pledge a property or other assets that could repay your loan. Personal guarantees and written promise of repayment from business owners are not tied to a specific asset.
Our Small Business loan program allows business owners to borrow P20,000-P100,000. If you’re a Small Business owner who’s in need of extra fund to support your business operations, then you’ve come to the right place! All you have to do is to fill out our online application, wait for our call within 48hrs, submit all the necessary requirements online and be able to receive your borrowed cash within 2-3 days.
4. Identifying the cost of capital
In evaluating potential lenders and their offers, you must know your overall costs including the interest and other additional fees.
Here are some factors that will help you to ensure that your payments will be manageable:
- The original fee – This is similar to an action fee for a loan. Depending on the type of loan you have and the borrower’s creditworthiness, these may range from 0.5% to 7%.
- Prepayment penalty – In some cases, lending contracts require a fee that will be charged for paying ahead of the schedule. Moreover, most borrowers may be charged an interest for the entire loan amount, regardless if they pay off early.
- Late payment fees – It is very important for borrowers to understand the terms and conditions, as it helps them to avoid paying late payment fees.
5. Mark the date of your business venture
If you are planning to apply for traditional or SBA loan in banks you need to consider a longer period of time because application and approval process take weeks or months.
On the other hand, online credit source such as marketplace lenders provide a faster application and process. Typically, funds may be delivered within the days or weeks.
6. Check the lender’s track record
In choosing your potential lender, bear in mind that you will create a relationship with them that may last for years. So you need to consider checking their track record of working with small businesses. Research their company profile through their websites and observe them on how they accommodate your concerns.
Vidalia Lending provides loan programs suited for your financial needs, we see to it that our customers is our top priority! Let us be an instrument to help you venture further in your business. You may learn more about our terms and services by visiting our website.