Small Business Loan Approval Guide
Peach Capital Funding Small Business Loan Approval Process
Getting funding through a small business loan requires a complete loan application and a solid business plan. Besides those 2 first steps you must know what the small business loan approval process is in order to understand where you need to be in order to qualify for a small business loan.
The business plan needs to show the businesses ability for generating a profit. A business plan is needed whether you are starting a new business or seeking funding for an existing business.
Personal Credit For A Business Loan
The personal credit of a business owner will matter only at the start of a new company. A new company will not have financials to provide a lender or a credit history of its own.
The business owner will have to provide a personal guarantee that the loan will not go into default. Small business loans, most of the time have higher credit limits than a personal loan, this is why the small business loan approval for financing can be much more strict. You need a credit score above 700 to qualify for a personal loan; to seek a business loan, your score should be as close to 750 as possible.
Securing Business Financing
After your business has been open for 3 years or more, it will have a solid record of payment and financial documents to provide a lender enough information to secure a small business loan.
Your business should and will have a Tax ID number and this tax ID will have a business credit score. A business’s record will show if the business has met rent or mortgage payments, equipment financing payments and tax payments. Any business credit card will also appear on this record of debt for the small business as well.
How To Build Business Credit
You can build strong business credit for your business by taking small business loans out in the business’s name. The longer you allow your personal credit score to be the sole record on your business, the longer it will take for your business to build business credit. This in and of itself is why understanding the small business loan approval process is very important so you can get a loan for your business as quickly as possible to avoid personal credit issues.
Any business can secure a decent business credit line. Using this business credit line to make routine purchases and paying down the balance each month is a good start to building business credit for your business.
Building Business Assets
It is very important to build assets for your business in addition to business credit. Purchase equipment and assets for your company when you can. These assets will not only protect you personally, they will also protect your business from going bankrupt.
If you are going to rent all of your business assets, you will have nothing to liquidate if you need to cover debts. Purchasing your business assets provides you with equity you can later turn into cash for any issues that may come up for your business.
Peach Capital Here to Help
Our loan experts are here to help you, we know the small business loan approval process can see difficult and that is why our loan experts will stand by you every step of the way to ensure you get the right small business loan while assuring you receive the best business loan terms as well.