As an entrepreneur, you know what you need in order to obtain more customers or increase sales, but you may not know what you need for a business loan. Every business, at one time or another will need to borrow funds so this is a subject that is important for any business owner.
A business loan may be necessary as a way to get extra capital so you can grow and stay successful. It is helpful to be prepared before you go in to apply for a business loan.
Things to Know Before Applying for a Business Loan
So, you have decided that the time has come for you to apply for a business loan. Maybe you have been presented with a profitable opportunity to grow your business. Perhaps you are already growing faster than expected and need to expand further. Whatever the situation, the obvious fact is that you now require business funding to take advantage of opportunities and increase your prospects for advancement.
When you have a thriving business, you might think it will be easy to march into your usual bank and apply for a loan. However, there are some things you need to know beforehand.
For one thing, you may not realize that it could take months between the time you apply for a business loan and when you actually receive your money. This is, of course, if you qualify for one in the first place. The truth is, most small businesses are not eligible for a business loan from a traditional bank.
First, there is a lengthy application process, which could take you days or weeks to complete. Among the documents you will have to supply are:
- tax returns
- income statement
- balance sheet
- a letter from your accountant
- reviewed financials
- accounts receivable and accounts payable reports
- bank statements
This is not even an exhaustive list. More might be required if there are additional questions about your revenue or ability to repay the loan.
In addition, even after you have provided all the requested information, the bank might still take several weeks before deciding whether or not you are approved. Overall, applying for a business loan can be a complicated, time-sucking process with no guarantee of success. In fact, if the first bank denies your application, you may have to repeat the process all over again at the next bank, and then the next. All this information gathering and running around can drain your energy and weaken your focus on what really matters — growing your business.
Alternatives to a Business Loan
With new government regulations overseeing lending practices, banks are tightening their belts and being super careful in fear of attracting additional scrutiny. As a result, the amount of loans granted has decreased since the lending windfall a few years ago.
Luckily, many alternative lenders have stepped in to provide the instant business funding entrepreneurs require. One of the best is a cash advance company, like Financing Solutions (www.fundmypayroll.com).
With a cash advance company, you can skip all the hassle from the banks. At Financing Solutions, you can be approved for immediate business funding after a 15 minute interview and minimal paperwork. If you have been in business for at least two years with assets under five million dollars, you could be eligible for up to 100,000 in short term business funding. In most cases you can have the money in your account in less than 48 hours.
The business funding you receive from a cash advance company can be used for any business purpose, such as making payroll, paying business taxes or building working capital financing. Repayment is quick and simple. Most businesses that use a cash advance company are able to repay the funds in as little as a few weeks or months.
When You Should Not Apply for a Business Loan
A business loan is only helpful if you are able to pay it back, hopefully in as little time as possible. If not, a business loan becomes just one more debt headache.
Getting a business loan should not be your only means of acquiring capital. In addition, if you find that you are constantly in over your head and struggling to pay bills, you may want to first reorganize your business operations and reevaluate your employee structure.
Before you decide to borrow money, it is crucial to develop a plan for how you will pay it off. Financing Solutions can decrease the stress of obtaining cash for your small business.