There are more than 31.7 million small businesses in the United States, and millions of jobs and family livelihoods depend on their operation. This responsibility that small businesses carry on their shoulders implies a constant search for strategies to stay afloat, especially in times of crisis, such as those they are currently facing due to the pandemic.
Having the capital and cash flow to cover your operating expenses is one of the biggest challenges. Accessing loans or financing can become a complicated task, especially with banking institutions, mainly if your business is newly created or if you do not have a social security number (SSN), to mention just the two main requirements.
In response to these needs, new alternatives have emerged that promote financial inclusion for underserved sectors with fewer requirements for entrepreneurs. These financial institutions offer the possibility of accessing a business loan calculator to facilitate the analysis of payment terms, amounts, and interest rates.
Before applying for a loan, use this tool to find out how much you can borrow and how soon you will be able to pay it back. Arriving with more information will allow you to focus on the solution that best suits your needs and will facilitate the approval process.
Below are some tips you should consider before applying for a loan. The more prepared you are, the easier it will be to obtain and pay for any financing product.
Define the purpose of the loan
Before starting a loan application, establish the objective of the loan. For this task, you can take into account your financial statements, your client’s comments, and feedback from your work team. Investments by instinct are not the best decision a business owner can make and much less in times of crisis like the ones we are living in nowadays.
Establish the schedule for using the loan
Once you have defined the objective of the loan, specify the dates, strategies, and resources you will need to carry out the implementation of your goal. It may be hiring more human capital, new equipment, specialized services, or whatever your company’s particular needs may be. It is recommended that you add 10% to the budget you have established so that you are prepared in case of cost increases and eventualities.
Research the requirements
Before choosing a lender, research the available options. The first step before finding out interest rates or monthly payments is to know the requirements. Most institutions ask that your company has been in operation for more than five months, has an annual income of more than $30,000, and even a credit score of more than 550.
Analyze your options
Choosing a lender is a task that requires time and effort. Research the advantages and disadvantages of each option. Use tools such as the business loan calculator to learn about the features of the deal. Then narrow down the possibilities to the three best ones and analyze the service and support they are offering you. The option that personalizes its service and solves all your doubts will probably be the best.
How you will repay the loan
Once you know how much money you need and who can provide it. Before applying for the loan, identify what will be the source of income to pay it back on time. It is recommended that you have a plan A, B, and even C. This way, you will never lose sleep because you have to pay the financing.
Building a long-term relationship with financial institutions will allow you to obtain larger loans with better conditions in the future. The keys to a successful loan are discipline, order, and excellent resource management. Try not to change the objective of the financing, do not mix this capital with the company’s income and much less with your own money.
Remember that great companies were not born overnight. They were built thanks to the hard work of great teams. Don’t hesitate to invest in your talent, obtain capital and continue building the company of your dreams. Use tools like the business loan calculator to clarify your ideas and make the best decisions. Research, plan and get the best loan for your business.