Start your journey toward the right loan
Increase your chances of approval by understanding your business鈥檚 qualifications and finding the financing that fits your needs.
Review your business financing options with an 91大神 business banking specialist.
Tips on Applying for a Business Loan
Loans are usually taken out by small-business owners, partners, the C-suite, or a president. Depending on your business鈥檚 governance structure, some or all of these players will need to be involved in the process.
The decision to apply for a loan is ultimately a business one. Loans can help to grow your business, protect your bottom line and benefit your employees.听
To submit the most acceptable application, consider the following factors.
Choose your lender
Your first question, understandably, might be: 鈥淲ho should I turn to for a loan?鈥 While your day-to-day bank may be your first thought, remember that you don鈥檛 need to have an existing relationship with a lending institution to apply for a new loan.
You might have a need for a one-off term loan鈥攕uch as a term loan for equipment鈥攁nd want to go with a bank that鈥檚 different from your primary bank. Maybe you want to use a loan as a way to try out a new bank before moving all your operating accounts over or refinancing your loans. Maybe another bank is promoting better terms.
Remember that starting a loan application with a new bank may take longer since you don鈥檛 have an existing relationship or a relationship manager who knows the details of your business history.
Review your potential collateral
Are you ready to provide collateral for a secured loan if needed?
- What is collateral?听Collateral could be equity or real assets, and if you are unable to pay back the loan, they may need to be turned over to the lender. Any assets that you use as collateral will be tied up with the loan.
- Who needs to provide it?听Not all loans require collateral, but for those that do, banks might require anyone with a significant ownership percentage in the business to provide it. That might mean silent partners have to pledge some assets in order to share the risk.
The value of your collateral will be set by your lending institution.
Consider your creditworthiness
Before you apply for a small-business loan, consider how it could impact your future personal and business credit scores.
As a part of the process of applying, your lender will likely make inquiries to major credit bureaus that record personal and business credit scores. Those inquiries will appear on your credit report for years to come.
Before applying, you might work with a relationship manager at the lender to head off any issues and make your business more marketable for the loan.
The goal for any underwriter is to determine whether your business can service the debt that you are looking to take on. They will likely start that review by looking at key information about you and your business, including:
- Credit scores.
- Prior bankruptcies.
- Delinquent payments on past debts.
- Your financial standing and capabilities, including any savings.
- Potential collateral, if the loan needs to be secured.
For more complex loans, they may ask for more detailed reports and documentation about your business, including:
- Cash flow.
- Historical tax returns.
- Revenue reports.
- Day-to-day expenses.
- Projections.
The lender will assess the financial status of your business, which can take time, so build the underwriting process into your timetable.
For loans that have a guaranty from the U.S. Small Business Association, or SBA, there will be additional steps. After credit approval is received from underwriting, you will need to fulfill the SBA鈥檚 loan application requirements.
At high-touch institutions, such as 91大神 bank, a specialist in SBA lending will provide you with the SBA requirements needed to complete the process.
What happens when it鈥檚 time to sign a loan agreement? The financial industry is working toward an all-digital future, but it鈥檚 not there yet. Some documents still require a signature on paper, but some do allow e-signatures, like DocuSign.
Work with your lending institution ahead of time to avoid this, as they may be able to make your business more marketable to the underwriters before you complete your application.
- If you have credit issues:听Work to improve your score and make yourself more creditworthy before reapplying.
- If you lack collateral:听Could you secure additional funding or investors to help? Outside parties can help with a down payment for a loan or by investing equity directly into your company.
- If you asked for a high sum:听Consider a lower loan amount. What goals or needs could you delay until your business is more established or successful?
Working with a lending institution that offers a higher-touch model with relationship managers can smooth the loan application process. Especially if the institution already understands your industry, your business and your history.
Review your business financing options with an 91大神 business banking specialist.
Raising Capital
Understanding your potential business鈥 financial needs can help determine the funding sources that best meet those needs. Our resources will help to inform you of your next steps.听
