Small business owners are the backbone of America. They keep the economy rolling, and they create millions of jobs across the nation every year. Owning a small business is one of the riskiest fiscal decisions a person can make, but it is also one of the bravest. Though the odds are stacked against small business owners, they keep going after their dreams anyway. For the brave small business owners that keep America running, we are there to help with life-changing loan packages and financial products.
We understand that securing a line of credit is one of the most powerful tools a business can have. In fact, it can make or break a business. We want to foster growth in small businesses by helping them secure a business loan. It is not an easy task, though.
We encourage loan candidates to prepare themselves for the application process by taking a few vital steps:
Address Credit Situations
Credit reports and scores are a key factor in securing any business lending or consumer lending. Not only will credit reports and scores largely determine whether loans are granted or denied, it will help to determine interest rates and other terms. The better a small business owner looks on paper, the better the loan terms will be.
Start preparing with a simple review of the credit report. These are available via free websites, like CreditKarma. If inaccuracies are present on the report, gather documentation proving the inaccuracy and approach the reporting party. If, and only if, it can be proven that the remark on the report is incorrect, the law requires it to be corrected or completely stricken from the records.
Poor remarks on credit reports are a heavy drag on loan applicants. Pay off all old debts, including collections, car loans, insurance, and student loans. Debts must be paid off and all lines of credit must be kept current. This step can take years to complete, but it is the best and most common way to prove fiscal responsibility.
Establish Credit Lines
If the loan amount desired is large, business owners must prove that they are ready for that type of responsibility. His or her credit report should tell lenders that they are properly in control of their money and that finances are actively and closely managed. There should be at least three tradelines open and the older the accounts are, the better it looks to bankers.
Resist opening any new lines of credit, or if new accounts are opened, applicants should wait for at least nine months before applying for a new loan. Lenders want to see how new credit lines are handled.
Debt ratios should remain below 30 percent of one’s annual income. A debt ratio of higher than 30 percent garners an automatic denial of loan applications. Make purchases with cash as often as possible in the months leading up to applying for a loan and do not move balances from one card or account to the next.
You Can Do It
Securing a loan is certainly a worthwhile endeavor, even if there are a lot of factors to control leading up to the application day. With a line of credit, business owners are enabled to grow with expanding product lines and more. Fulfillment of larger orders and purchasing new equipment and supplies is possible. Work hard for this life-changing loan, meet requirements set by bankers, and a loan will be yours.