What to Do Before Applying for a Business Loan

what-to-do-before-applying-for-loan
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Piece the Financing Puzzle Together

The SBA reports that over $1 trillion was given to small businesses in 2013 in the form of a small business loan. And there’s plenty more money to give to those who seek it. But, deciding that you want and need a loan is only the first step. What happens next?

This is our area of expertise. Direct Capital has been providing businesses with financing since 1993, so it’s safe to say we know the ins and outs of the industry. We enjoy helping businesses grow and succeed, both by providing financing and giving business advice. In this article, you’re getting a little bit of both.

Small Business Loan: Things to Consider

Despite how eager you are to get money for your business, you can’t just jump right into it. According to Evan Singer, general manager of SBA’s loan platform, you will have a greater chance of getting a loan if you take some important steps first.

  1. Why do you need this loan?: A lender may not ask you this, but it’s important to consider. Small business loans are typically used to take advantage of an unexpected opportunity; not just to have some extra cash on hand. Putting some serious thought into this before making your decision makes the following steps much easier.
  2. Assess your budget: Much like getting a mortgage on a house, a business lender wants to make sure you can afford your monthly payment. Before asking or applying for a loan, look at your cash flow. Is it good? If not, what can you do to fix it? Then, simply inquire about different lenders and their terms. Which will give you the best rate? Is that something you can afford right now?
  3. Know your credit score: More often than not, the score you find online for yourself or your business will be different than the one lender’s pull. (See our infographic to understand why!) However, it is important to know both your personal and your business score because the lenders will ask. And, of course, they will be looking for a certain score to help determine how reliable you are in making payments. Not all companies will disregard you if you have a less-than-average score, so do some digging and find out where you can go to get the loan you need with the credit score you have.
  4. Get your financial documents in order: Most lenders will ask for financials so it’s important to have them ready before applying. If needed, this will save you time and enable you to get financing fast.

Small Business Loans with Direct Capital

This Friday begins our “Finance Friday” series and first up is Working Capital, so you will be able to get a much more in depth look at our program there. But, we do want to give you a brief roundup of what you can expect when you apply with us for a business loan.

  1. Our terms: We want you to pay back the loan on your terms, so we make it pretty flexible allowing you to choose from 3 months to 18 months.
  2. Repayment: Here’s where assessing your budget becomes extra important. We deduct payments daily over the length of the term through automatic debiting.
  3. Application process: We make it simple. Through our online lending platform, you can apply in minutes and get an approval in seconds. Plus, we make the funding available almost always same-day.

Check back Friday afternoon to get an even deeper look at our working capital program and hopefully we’ll answer all of your questions!

And, for more information on who we are, what we do, and how we help small businesses like yours every day, visit our website or give us a call at 866-777-0117. We look forward to hearing from you!

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