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5 Tips to Help You Qualify for a Small Business Loan

For small businesses, there will come a time when there will be need for growth. But getting the fund to grow a business is a major challenge for most small businesses. Banks and other lending institutions consider it risky to give loans to small businesses. This is why for a small business to get a loan, it will need to present a lot of convincing details.

Big companies don’t have any problem getting a loan from any lending institutions. This is usually because they have well a laid out plan and they can afford to pay the money without any problem. For a small business, it will require the business owner to be very smart. Here are tips that should help a small business get a loan:

Justification

The first thing you will require is a business case. Your business case should show your revenues, expenditures and the investment you have made before. This should help your lending institution make their final decision. The information will also help you identify possible financial sources and know how much money you should borrow.

Your financial records

Small businesses are poor in record keeping. Make sure you keep your financial records orderly before you apply for a loan. Maybe it is your supplier financial records which usually helps in identifying any overdue accounts.

Type of loan

There are various types of loans. Make sure you decide which type of loan you want to pick. You might be looking for a short-term loan that is usually of great help when you are in urgent need of money. Short term loans are supposed to be repaid within a short period of time.

Long-term loans, can be repaid within a period of over a year. Know your financial capability to settle the loan within a given time.

Short and long term plan

No lending institution that will grant you a loan if they don’t know how you are planning to use the money. Make sure you have a well laid out plan for your business.

Getting a loan granter

Banks are usually reluctant to lend loans to small businesses. There are other lending institutions where you get a loan from. You will need to do a lot of research to find a genuine lender. Pick the one that has good rates.

Small businesses face a lot of problems and one of them is getting a loan. Most lending institutions fear for the safety of their money and therefore less willing to approve loans for small businesses. This is the reason why a small business should have a good plan to convince the lenders that it is capable of repaying the money. The tips discussed above can really help.

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