How to Get a Business Loan From a Bank
Most business owners are well aware that capital is required to ensure the success of their company. If you are new to the world of small business loans, how can you go about securing the funds needed to support the growth your company?
5 Ways to Get a Business Loan From a Bank
The process of acquiring a business loan from a bank can be simple or complicated depending on a few important factors. Here is what you will need in order to get a business loan when applying through a bank:
- A Business Plan: Why are you applying for a business loan? Are you going to fund a new fleet of vehicles, or are you interested in equipment financing? Create a business plan by answering these questions. This will help to point you in the best direction of where to go for your loan and which type of loan you will need.
- A Set Loan Amount: How much money do you need? And how big of a loan are you going to apply for? Assess the current state of your finances to determine these numbers before applying for a loan. This will increase your chances of securing the amount you need.
- Great Credit Score: Your credit score is directly associated with the level of risk the bank will take when providing you with a business loan. Banks will not lend money to individuals or business owners unless they have proof that they are reliable borrowers who are able to repay the amount in full on a recurring basis. If you have a high credit score, then your odds of getting approved for a bank loan will be high.
- Clean Credit Report: In addition to a high credit score, you should also have a clean credit report with a history of regularly making payments on time. Prior to contacting a bank for a loan, file through your credit report to make sure there are no errors or disputes that need to be addressed.
- Proper Documents: To expedite the application approval process, gather past financial statements, including credit card statements, tax returns, income statements, and balance sheets. This will play a major role in whether or not a bank will qualify you as eligible to repay a loan if it is granted to you.
- Collateral To Pledge: Depending on the type of assets you have immediate access to, you may need to pledge a certain amount of loan collateral in order to receive approval. This can be business collateral, like company cars, offices, and equipment. It can also be personal collateral, including your home and cars.
Although all lenders and borrowers are different, your eligibility for a specific loan amount will ultimately depend upon factors including but not limited to the ones listed above.
How To Get A Bank Small Business Loan With Bad Credit
Your credit score has the potential to significantly impact your ability to receive a small business loan from the bank. However, there are ways for you to avoid issues that may arise when applying for a loan if you have a bad credit score.
Here are three tips on how to get a loan with bad credit:
- Rebuild Your Credit Before Applying: If you have a credit score under 580, FICO considers this to be “poor credit.” Receive a free online report to assess which areas of your credit report need improvement and how you can go about building up your credit before applying for a loan.
- Get A Co-Signer: Do you have bad credit? Find a person who has great credit to co-sign the loan for you. This will improve your chances of getting accepted for a bank loan even if your credit is low, and may even result in securing lower interest rates and better loan terms as well.
- Consider Different Lenders: If you don’t have the time or resources to work on improving your credit score before you apply for your loan, you can pursue other financing options. There are several lenders available who loan to business owners with credit scores lower than 600, and even some who lend to those with scores below a 500.
Bank Business Loan Requirements
Different banks have different requirements, which means that the up-front costs and payment terms will range from bank to bank. For example, Wells Fargo SBA loans have longer repayment terms and lower payments. Be sure to research multiple banks to figure out which one will work best alongside your business budget and needs.
Easily Secure A Small Business Loan With National Business Capital & Services
If you’re short on time and need money quickly, don’t jump through hoops associated with applying for a loan from a traditional bank! Skip the complicated process and apply through a reliable lender like National Business Capital & Services instead.
Call National Business Capital & Services at (877) 482-3008 or fill out our 60-second online form to discuss your eligibility and loan options with a member of our team today.