Although the process is not always easy, it is far from impossible to get a business loan. Understanding the process will help you to find success in your first application.
Getting a business loan is not as easy as it used to be but that does not mean that you will not be able to get a loan to help you reach your goals. Understanding the process and being prepared can offer you a great deal of peace of mind as you work your way through the process. The first step in being prepared is beginning to seek a loan before you actually need it. Start by building relationships with commercial lenders, learning about the commercial loan industry and educating yourself on the process that you will need to follow when you apply for a loan. During your planning stage, you should be determining how much money you will be asking for and learning which lenders are servicing loan requests of that size.
The preparation stage is also when you need to evaluate your current financial health and apply it to the criteria that lenders are looking for in a borrower. You will need to have a credit score of at least 650 but 700 would look more favorable. Having a score closer to 800 will all but guarantee your business loan approval. Your personal debt to income ration should also not exceed 33%. Also understand that time in business is important. Two years old is still considered a fledgling business and represents more risk than a more established company.
As you begin to pare down your list of potential lenders, evaluate them as you would any other service provider. Selecting a lender who specializes in loans of a similar size and type is always wise. You will also want to consider the lenders proximity to you. A local lender is often willing to assume a slightly higher risk that one that you have found online or are working with remotely.
Complete the Documentation
There is a substantial amount of documentation required for any commercial loan. You will need to present 3 to 5 years of financial statements, bank statements and taxes. In addition you should also be ready to submit your personal financial information if your business is less established or has very few assets. All lenders are going to need copies of this basic information and having it complied and ready to present will eliminate a lot of your stress when completing applications.
Submit and Be Attentive
It is not uncommon for lenders to need additional documents or clarification on the documents that you submit for a business loan. You can ensure that the process remains on track by maintaining communication with the lenders as they are reviewing your application. A call or email once each week to inquire about the status of your application is not being demanding or pushy. It also provides the lender with the opportunity to ask any questions that may have arisen. Being prepared and knowing that the process takes a month or more to complete will allow you to relax once your applications are submitted.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.