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Matt Trice

Tips For Securing A Small Business Loan

The term "small business loan” can sound scary to business owners who don’t know how to go about securing one on their own. Our partner Kabbage, the #1 online provider of business loans, is tackling this issue by sharing their top 4 tips for securing the best loan option for you.

Check Your Credit

You must be creditworthy to obtain a small business loan, and your personal credit score is a good indication of how creditworthy you business is. There are many websites that can help you find and analyze your personal credit score, but we recommend Credit Karma who will do so for free. Once you know whether you have poor, average or excellent credit, you’ll be able to also determine how likely your business is to be approved for a loan before going any further in the process.

Research Lending Institutions

Understanding the different lenders and loan options currently available will help you determine which options is the best fit for you. The SBA has offices in every state and big city to help answer any questions or address concerns you may have. Regional organizations like your local Chamber of Commerce can connect you with other SMB’s willing to share their experiences and insights for reference as well. Researching the different traditional lenders (like banks), credit unions, and alternative lenders (like Kabbage) out there will help inform the most successful course of action.

Create an SBA “Resume”

While Kabbage loan applications are 100% online and require no paperwork to complete, gathering all the documents needed by other lending institutions beforehand will create a more smooth and successful application process. Income records, tax forms, resumes, personal credit reports, proof of collateral, and other financial statements are examples of what to compile. Find the loan application from the institution you wish to apply so you can have everything filled out and ready to go. You may also need to provide a detailed business plan as part of your small business loan resume. It should include your business profile, market overview, business structure, and marketing plans. For more information on preparing a loan proposal, visit the SBA website.

Outline A Loan Repayment Plan

It’s easy to focus all your energy on the end goal of obtaining the money from your approved loan while you’re planning. However, creating a payment plan for your loan upfront is equally important to the planning process. Outline your payment plan for each installment and a plan for how the capital for each will be generated by your business before then. These milestones and measurements all laid out upfront will make it easy to ID potential issues with your ability to repay certain loan amounts or types before you apply. You should try to avoid taking any loan without a plan in place for obtaining the revenue needed to repay it with, first.

It’s important to invest in the future of your business, and obtaining a small business loan is a great way to do just that. Use these tips to help your business prepare to obtain the right loan from the right lender. If you do we’re sure the term “loan” won’t be nearly as scary to you in the future.

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