3 Tips for Getting Your Small Business Loan Approved
Get Your Loan Approved with Peach Capital Funding
For all small business owners in need of a business loan, getting a loan approved can be difficult. The process of getting a business loan can get a lot easier with the right preparation and an understanding of the importance of cash flow as it relates to getting approved for your business loan.
Here is a few ways small business owners can turn a no into a YES business loan approved
- Apply for the right business loan. Business loan applications are typically denied because business owners are looking for the wrong type of business loan. Loan applications are often declined because the bank does not lend to certain industries, such as loans for Cannabis related businesses. Applying for the right type of business loan from the right type of lender is the first step to getting approved.
2. Do You Have cash flow. Business loans are turned down because underwriters can’t find enough cash flow to support loan repayments. Documentation starts with three to six months of banks statements and your corporate and personal tax returns. Your current year-to-date financials with prior year comparisons and a debt schedule. With this information, the underwriter will determine how your cash flow compares to the anticipated loan payments.
Cash flow is typically calculated as net income plus interest expense, depreciation, amortization and non-recurring expenses. Start by creating a plan that helps underwriters understand anything that should be taken into account to get the business loan approved.
Preparing a business plan with detailed projections is key
The business plan should document any contracts that will support the business loan and provide a detailed explanation of how the funds will be used.
3. Your personal credit. For small business owners, personal credit scores have a huge impact on credit worthiness when it comes to a loan, improving your credit scores in advance of seeking a loan is key.
Here is a secret for those that pay off their credit cards each month. Making credit card payments 2-3 days in advance of due dates will result in lower utilization and can improve your credit scores.
SBA loans can overcome conventional lending difficulties. In the end, having the right preparation in advance is key when applying for a business loan. When a business can show cash flow available to support the requested business loan, lenders can typically find a way to say YES to your small business loan.
Contact Peach Capital Funding today and let us help you find that right loan and help you prepare and get approved fast!