Whether you’re looking to get an SBA loan from the government or a bank loan from your local bank, it’s important to be prepared and have all the right documentation ready to ensure that you can get the money you need and start your business as soon as possible. This guide will go over everything you need to know about SBA and bank loans and will provide tips on how to get approved quickly so that you can begin operating as soon as possible.
Why people think they can’t get a business loan
With small business loans at historic lows, it’s easy to think that you can’t get a loan for your small business. However, there are several options available—you just need to know where and how to look. When you apply for an SBA-backed loan or a bank loan, make sure you know what kind of business loan you need. In some cases, it’s easier to get your first business loan from a bank or financial institution than from an SBA-backed lender.
How to Get an Instant Decision
If you’re planning on financing your business through a bank loan, it can be tempting to apply for more money than you actually need in order to make sure you don’t miss out on any opportunities. Unfortunately, applying for an amount that’s larger than your actual needs can hurt your chances of getting approved—or approved in a timely manner. If your application is rejected, you may have trouble repaying loans with high interest rates.
Differences Between SBA and Bank Loans
Before you can pursue an SBA or bank loan, it’s important to understand what sets them apart. First, let’s look at how each is used by business owners today. Banks lend money based on a business owner’s credit score and personal credit history. It comes down to a matter of trust between lender and borrower—and usually involves some collateral from both parties.
The 3 Basic Types of Business Loan
You’ll want to explore your business loan options before you apply for a bank loan. There are three basic types of business loans—SBA, peer-to-peer, and bank loans—and each one has its own set of pros and cons. Here’s a breakdown of what you need to know.
A Brief Intro to Small Business Administration (SBA) Loans: The first step in exploring your bank loan options is figuring out if an SBA loan is right for you. An SBA small business loan can be incredibly valuable because it features low interest rates and small amounts of paperwork when compared with other traditional funding sources like banks or angel investors; however, there are plenty of hoops to jump through before getting approved.
The 4 Key Steps in Applying for a Business Loan
If you are applying for a loan from an institution, such as a bank or credit union, there are four steps that will help ensure you get what you need: 1. Make sure your small business is ready; 2. Shop around for interest rates; 3. Secure collateral; 4. Submit an application . first, make sure your company can qualify for a loan by researching its financial history and debt capacity. Generally speaking, banks like to see some operating history (three years is good), assets (such as accounts receivable) totaling at least twice monthly debt payments, assets in proportion to liabilities (in other words, don’t have $1 million in loans with only $200 in assets), positive cash flow from operations over time (excluding one-time expenses), and so on.
Tips to Prepare Before Applying for a Business Loan
Applying for a business loan can be a stressful experience—especially if you’re new to starting your own business. Here are some things you should do before applying for a bank loan or small-business loan from an SBA -approved lender: 1.Gather all financial documents. 2.Have cash on hand. 3.Know how much money you need (and why). 4.Make sure your business plan is airtight and has been reviewed by others before submitting it to lenders; make any revisions as necessary, but don’t let lenders discourage you from having professional support in creating a well-developed business plan, especially if you feel like it needs some work!