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There are some steps you can take to get small business loans and to make sure you are approved for the best interest rates.
No doubt, if you own a small business, COVID-19 has affected your business. Many companies have had to shut down for months. A small business loan can help you get back on your feet, but what do you need to do to make sure you get approved for a loan?
1. Analyze your Credit
You cannot know your odds for approval if you do not know what your credit is. Do not ignore this step and brush late payments under the rug. Rip the band-aid off and gain an understanding of your full credit picture. Do you have bills that are still overdue and not paid?
2. Pay off anything overdue
Creditors looking to loan you money want to see that you are capable of managing your money and paying other bills. If you have any outstanding bills, pay those immediately so you can show a solid on-time payment history.
3. Go to Credit Counseling
If your credit is not in good shape, a lender might take a chance on you if you proved you have undergone credit counseling and have taken steps to take debt seriously.
You can also consider applying for a Paycheck Protection Program (PPP) loan to help build your credit back up.
4. Work with the SBA (Small Business Administration)
Loans available from the SBA are guaranteed and you can use them for a variety of small business needs. These loans can give you operating capital, pay bills, pay employees, or pay overhead costs. Really, an SBA loan can be used for just about anything business-related, and you might be eligible even if you have poor credit. Overall, approval rates for SBA loans are on the rise.
5. Know your eligibility requirements
Like analyzing your credit, you want to analyze your small business. How do you receive income? How many owners are there? Where is your business, and how many people does it employ? You need to know the numbers of your business inside and out. Imagine being on Shark Tank where you will be grilled on your past and future financials. Become intimate with your business, as it will only help you acquire funding and loans.
What hurdles will you have?
Again, know your credit and know your business. You might be eligible for certain U.S.A. only loans, if all of your business is done in America. If you have employees that are unemployed, they are going to be eligible for federal unemployment. What unemployment insurance do you have? Are all of your insurances in good-standing or do you need to work with your insurers?
Getting approved for a small business loan
If you follow our steps above, you should be in good shape to qualify for a small business loan. Once you have your loan, be smart and apply it to your business in the most economical ways. You want to pay off bad debt and also set yourself up for future financial business success.
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This content is sponsored by Harry Green.
Photo: Shutterstock