Businesses need money to operate. Whether it is money for starting the business, money to finance an expansion, or money for working capital during a period of economic difficulties, your ability to find a small business loan can make or break your business.
Fortunately, finding lenders that make small business loans is not very difficult to do. There are not only banks, but other lenders that specialize in working with small businesses to help them qualify for financing. Depending on the amount that your business needs, the requirements may not be that difficult. If your business has been established and has a solid credit history, most lenders would be happy to work with you. For loans of less than $100,000, many times there is very little in the way of financial documents that will be required. As the amount needed increases, the requirements for supporting information will also increase. You will need to check with your bank for what the requirements are, not only do the requirements change from bank to bank, but banks make periodic updates to the requirements, so what was true last year may have changed this year.
If your business has not been in existence for very long, or if you have had financial and credit difficulties in the past, it gets much more difficult to qualify for a loan. Your businesses credit score may be too low to qualify for a small business loan through a bank or other conventional lender. The good news is, there are lenders that specialize in lending money to businesses that do not qualify with a bank. The loan will usually be structured differently, and the interest rates are typically higher, but there is money available.
One way to increase the likelihood of qualifying for a small business loan is to work with the Small Business Administration (SBA). One service the SBA offers is to provide loan guarantees for businesses that qualify. What this means is that the SBA will secure a certain portion of the amount you borrow. This SBA backing assures the bank that even if your business fails, they will get their money back. This guarantee makes it much more likely that you will get the small business loan you need. These SBA Guarantee loans can be used for anything from business startup to working capital to the purchase fixed assets. They are designed to meet any number of business needs that may arise.. Contact your local SBA, or schedule an appointment with a SCORE (Service Corps of Retired Executives) volunteer to find out what it takes to qualify for one of these guaranteed loans, and to get the process started.
Very few small businesses make it through their existence without the need for a small business loan. It is not an indication of a business in trouble, or of poor management. It is sometimes a necessary step to ensure the future growth and profitability of a good business that may need a little extra cash. Small business loans can be the safety net your business needs to increase the chances for its survival.
