Owning a small business means learning how to balance the needs of your business as well as the budget you have available. If your company is growing and needs to expand or needs new machinery and equipment, finding the funds for that can be challenging. You might find yourself considering a small business loan but be hesitant because of some of the misconceptions that you've heard. Here are a few things you should know about small business loans before you make a decision.
Small Business Loans Aren't So Hard To Get
Some business owners avoid applying for small business loans because they believe the loans to be exceedingly hard to qualify for. The truth is, small business loans aren't any more difficult than any other loan, particularly if you know what is expected in advance. Call the lenders you're thinking of working with to ask what their loan requirements are. Make sure you find out what documents you'll need to provide so that you can have everything gathered before you apply. This makes the application process faster and easier.
Your Credit Rating Isn't The Deciding Factor
You might think that you can't get a small business loan if you have bad credit. While poor credit scores can make it more difficult to qualify, the bank isn't only looking at that. In fact, there are small business loans out there for all kinds of credit situations. In many cases, your company's performance, current cash flow situation and payment history are far more important.
Your Bank Isn't Always The Best Source
While getting your small business loan directly from the bank that holds your accounts can be convenient, it isn't always the single best solution. It's a good idea if you have a long history with the bank and they are offering you lower interest or easier qualification terms. However, there are many other sources you can consider, too.
For example, if your business operations are somewhat volatile, as can happen with specialty markets or seasonal businesses, you might want to consider working with an alternative lender, such as a credit union or a small business financing company. Some alternative lenders may even give you a line of credit or an easy way to expand your loan if necessary in the future.
No small business owner should have to sacrifice company growth because of misconceptions about financing. With the information here, you'll be better prepared to pursue funding for your capital investments or your company expansion. Talk with your local financial institution, Community Resource Bank or other small business funding services for your options today.