How to Get a Business Loan Fast (A Step-By-Step Guide)
With harsh borrowing terms from almost all the lenders, it seems like securing a business loan has finally reached a dead end. Regardless, of the strict requirements, many small business owners get loans. Why? They didn’t quit and are very organized.
Nowadays, there are so many lenders, such that if bank ‘X’ turns down your application, bank ‘Y’ might offer you one. To help you get a business loan; effortlessly, here are the 5steps you should follow:
1st. Know Why You Want the Loan
Establish whether you really need a loan, then, clearly outline what you use the credit for— your business or idea will influence the type of loan you qualify for. For example, if need money for a company start up, your lending options will be different from someone who has been in the same business for 10 years and is need of working capital.
2nd. Calculate the Profits Your Business Will Bring
Immediately after establishing why you need a business loan, your next task is to ascertain how much funding will be optimum for your business.
To help you out, we recommend you use your business calculator to calculate how much you will be earning against how much you will be paying. Also, it will help you figure out the amount of interest your lender expects you to pay.
Calculate your Debt Service Coverage Ratio (DSCR). If you already have an outstanding loan balance, DSCR will help you determine whether you have sufficient cash to cover all your financial debts.
These calculations will help you to determine whether the loan is feasible and if not, make the necessary changes.
3rd. Compare Provided Loan Options
After confirming you actually need a loan, and that you are to repay it, it’s time to compare the available lending options. Before picking an option, check elements such as repayment period, interest rates and the kind of collaterals required. However, you have to apply deeper filter options, including your versatility in the industry, and credit score.
4th. Get Your Documents Ready
After reaching the lending options that best suits you, look at the information and documents required and get them ready.
In some cases, after presenting the required documents, the lender might ask for extra papers to strengthen your eligibility. The quicker you provide them, the faster your loan will be approved. We highly recommend, you keep your documents on the cloud, for example Google drive. So that you can submit them on the go!
5th. Apply for Your Loan
With all the documents ready, apply for your loan! Unless they need hard copies, you should be able to upload your documents and other information online.
Read all the questions, understand them, and answer diligently. Then wait for the lender’s feedback. If your application is turned down, wait for the grace period to elapse then reapply. But first, find out why your application was rejected in the first place and improve on that.
Be patient and persistent while you get a business loan. You might not be granted the business loan you want today, but, don’t give up, keep seeking and you will find one that will improve your business. As a rule of the thumb, don’t be a multiple-borrower—don’t be indebted to more than 1 lenders.