If there’s one thing, you most certainly can’t shy away from when it comes to starting and running your own business, its finances. Dealing with your personal monetary affairs well and managing those of your business is a number one priority. At some point, you’ll probably need to apply for a small business loan, and then you’ll be subject to a lot of questions and scrutiny. What are those potential lenders really looking for? Are you best served by a low-rate loan from a bank you already work with, or do you need fast cash loans no credit check to get through?
Factors To Consider
When deciding whether to extend you a small business loan, providers take into account a complex picture of interconnected circumstances, and their criteria may shift over time according to your changed circumstances or even their own business priorities. However, the three main categories of information that they will use remain the same – the time your business has been operational for, your revenue and your current available credit.
Your Time In Business
When it comes to business financing, it’s similar to personal loans – lenders universally want to see a good and consistent track record. And if you’ve been in business for six months or less, this could be an issue. A lot of lenders will require you to have been operational for one or two years before they will extend financing. And really, it’s little wonder when you consider the failure rate statistics for new business ventures. This means that if you’re only just launching, then you may need to think outside of the box when it comes to securing the funds you need. You may choose to try and find a business angel, or a private individual that invests in companies in a similar sector. There are microloans schemes set up specifically for startups, often run by the government. If you have an easy to explain concept or product, crowdfunding can produce some excellent results for smaller amounts. Or you may want also to consider applying for a business credit card, as long as your credit score is strong.
A lot of small businesses go through an initial period of not making any profit, so if you do have healthier revenues, that’s something positive that indicated that your company has potential. You may have to provide copies of recent business bank statements to show healthy cash flow. If you haven’t taken the time to separate your business and personal finances, this is a hurdle you may struggle with. It’s always best practice to maintain separate accounts, even if you are a sole trader – the administration down the line is a lot less complicated.
Your Credit Score
We all know we have a persona credit score, but your business will have one too. But don’t despair if yours aren’t great – there may still be financing out there for you. Of more importance is any open and outstanding issues, such as unpaid accounts or incomplete bankruptcy orders. Your personal score may also be reviewed as a part of the same process.