If you are launching a startup or expanding your business, you need funding. This funding often comes in the form of a business loan and is used to secure inventory, purchase equipment, hire new employees, rent space, and a variety of other business-related expenses. That being said, it’s important to note that there are a few things that may keep you from being approved for business funding.
8 Things That May Prevent You From Getting The Funding You Need
• Poor credit history
• Limited cash flow
• No solid business plan
• Too many applications at one time
• Not seeking expert advice
• Not shopping around
Different Types of Small Business Loans
It is important to note that, depending on your needs, you may have several options for business funding available to you. The most common types include:
• SBA loans
• Short-term loans
• Long-term loans
• Bad credit loans
• Secured loans
• Unsecured loans
• Merchant cash advance
• Equipment financing
• Invoice factoring
How to Apply for a Business Loan
When applying for business funding, you must understand what information is required so that you can have it ready. Most small business lenders need the following:
• Up to 3 years of financial statements/tax returns
• 3 months of bank statements
• Accounts receivable reports
• Proof of ownership
Additionally, your credit score and credit history will be considered, so it’s best to have good credit, which typically means at least a 690. If your score is below 689, you have fair credit and below 300 is bad.
Cash flow is also important because they want to know that you have the revenue and sales to pay the loan back. Ideally, your debt-to-income should be 1.35 or lower.
You also need a strong business plan showing that you will be able to repay the loan- especially if you don’t have steady cash flow yet. Some lenders may require collateral, which can take a variety of forms. However, it’s important to keep in mind that if you don’t repay the loan, the lender can take possession of the assets.
Once you submit your application for business funding, it may take several days, weeks, or even months to get approved. If you need help with business funding, contact Aspen Capital Solutions. We can help you determine your best options for getting what you need and how to overcome the roadblocks that are preventing you from getting the funding that you need.