How to get a small business loan: terms and conditions
Online loan application for small business
Lending is an effective tool to help you either start a business or develop it. Every year banks provide more and more favorable conditions for entrepreneurs and companies: interest rates decrease, terms increase. An online loan application is submitted along with documents confirming the solvency of the organization or legal entity. In the form, you must indicate the name of the company, contact person, telephone and e-mail, the amount and terms of the loan, annual revenue. You also need to indicate the purpose of obtaining a loan. For example, a loan may be needed for current purposes (rent, salary), for investment (purchase of equipment, transport, office or workshop), as well as for refinancing loans.
The main lending conditions for small businesses
When applying for a business loan online, the conditions must be considered. Among the main requirements is the presence of USA citizenship. Also important is the absence of tax arrears. Another important rule is that the company must be registered in the area where the loan application is submitted.
You can check if you will be given a loan here.
Banks issue loans to firms that have been on the market for at least 3 months. Some organizations have stricter requirements - at least a year. Financial statements are subject to extremely rigorous scrutiny. Loans are issued only to businesses that operate without losses. In addition, the following mandatory requirements are also distinguished.
Provide financial security
It is necessary to provide additional guarantees that the company will return the borrowed funds. If there is reliable security, then it is beneficial to both parties. As for the borrower, the loan term increases, the interest rate decreases, and other conditions are softened.
As for security, there are 2 forms - pledge and surety. For the first, real estate is suitable, both residential and commercial. You can use vehicles, stocks, land, and more. The guarantor can be not only individuals, but also legal entities, including centers of entrepreneurship, business incubators.
Have a good credit track record
When a bank receives an application from a company, it reviews its credit history. There should be no delays in payments on previous loans. The loan must be repaid on time. There should be no outstanding loans at the moment.
It should also be borne in mind that a lack of credit history is no better than a bad reputation situation. Refusals are possible when submitting an application if the borrower has never taken out a loan before.
Check that there are no tax debts
For most banks, it is important that the borrower has no debt at all. And this applies not only to previous loans taken, but also to tax payments. If there is a large debt on the last item, then the application may be rejected.
Draw up a detailed business plan
A well-written business plan clearly shows future expenses and income. This means that the lender can be calm about whether the borrowing firm will be able to repay the loan. When submitting an application, a short version of a business plan is provided - up to 10 pages of text.