It can feel stressful figuring out how to get a small business loan. A question you may ask is, “What do banks look for when applying for a business loan?” or “What is the loan application process for online lenders?”
The loan application process is pretty much standard across the board. And, what a bank vs. an online lender looks for when you’re applying for a business loan is relatively similar as well.
At the end of the day, there’s an overall “flow” to expect when getting a loan. It all starts with reaching out to a lender.
Four Things to Expect When Applying for a Business Loan
We’ve put together a quick list of what you can expect when applying for a small business loan. So, you are not blind-sighted by the loan application process. These tips are suited for banks and online lenders unless explicitly stated otherwise.
1. You’ll Need to Be Prepared
Before you start applying for a small business loan, you’ll need to have a plan for your funding. The lender (both banks and online lenders) will likely want to know how much capital you need & what the funds will be allocated towards.
They’ll ask what your business process and model are, along with what your overall goal is for 1) acquiring the loan and 2) paying the funds back. There’s a better chance for the loan application process to go by smoothly if you come to the table ready to answer those questions.
2. Interest Rates (Cost of Borrowing)
Now, don’t let this scare you away. Interest rates are just a fact of lending. No matter what type of small business loan you get, there will be an interest rate attached. These rates usually vary based on factors like credit score, amount of business cash flow, funding amount, and repayment length. External factors, such as the market demand for loans, also contribute to varying interest rates.
3. Straightforward Approach to Approval
One notable benefit of business loans is the application process. You typically only need to fill out an application, chat briefly with your lender, and then you’ll be notified if you are approved or not. There’s not much guesswork involved since approval is generally based on hard facts (aka objective information).
4. Perfect Credit Is Not Needed
A common misconception about applying for a small business loan is that you need a perfect 750+ credit score to be considered. That couldn’t be further from the truth. While some bank-backed business loans do have strict requirements, MCAs are less harsh in terms of credit. So, there is hope for approval with an online lender, even if you have a lower score.
Get a Small Business Loan Now
It is nice to know what to expect when applying for a loan. So, we hope those four tips will make the loan process more straightforward for you.
Securing funding for your small business is a huge step that requires a personal, professional touch. The experts at Merchant Funding Solutions would be happy to lend a hand to help you get a small business loan now. Let’s get started.