You can have a great business idea, but it’s useless if you don’t have the funding to protect that value. Of course, you can pay out of pocket or find an investor if you’re lucky. And then there are business loans, which are available to everyone, theoretically but known to be available. Fortunately, there are ways to successfully launch your business to help you get started. Read on to find out.
During the loan process, many applicants forget about the essentials needed to get financing. Don’t try to get a business loan or line of credit until you have established the following:
• Excellent Dun and Bradstreet report on your business without delay
• Two-year tax return for individuals and businesses
• Current balance
• At least 700 FICO scores on the main borrower, without any final delays, lawsuits, tax permits or other negative information.
It is a great idea to make sure that you are fully prepared for the loan process before starting the application process. Proper loan planning is more important (if not important) than preparing a financing application.
Before applying for a business loan, be aware that some lenders may be sensitive to any falsehoods you may have in your application. A key factor in determining abuse is the intent of the lender in the misinformation provided to the lender. Is this misrepresentation intentional or unintentional? What is the level of misinformation provided? Does the misrepresentation change the material in the app? In other words, would the lender probably accept the request, knowing that the misstatement was in advance? Remember to review all documentation provided before sending it to a lender to avoid these problems and potential loan scams.
In today’s business lending world, it is more than ever clear that lenders are tightening their requirements. Selecting the right lender for your business is half the battle before submitting an application. Does the lender generally lend money to your type of business? Is the lender specialized in national geographic areas or is it a national lender? What is the documentation required by this lender as they change? What is the acceptance period? These are critical questions that lenders need to determine before submitting an application. This will allow you to take great care in choosing the right lender for your business.
Many lenders take an overly aggressive stance when it comes to applying to multiple lenders to secure financing for their business. It is not necessary to apply to multiple lenders and thus your personal FICO scores will be reduced as each credit inquiry will lower your scores by about three or four points. This is even more damaging if they make the same mistake in every app causing each one to crash! After that happens, the next lender will see the query and ask why you made so many requests and why they didn’t accept you? thus encouraging you not to accept it either.
So it’s a good idea to be more sensitive to your credit and not apply to more than two lenders at a time to avoid lowering your credit scores. Once you have received the decision and it is negative, take the time to consider the reason, correct it, and re-apply to another lender. It should be noted that in most cases, when your business is rejected with a business loan, you usually cannot go back and apply for the same loan again for at least six months and if so, it is very likely to be rejected again because the application was a “red mark”. Therefore, it is essential to correct it for the first time.
In fact, the world business loan financing it seems a difficult territory to navigate, but it is not at all unknown. With great advice, good attention to detail and great courage and determination, it is up to you to finance your great and great idea.