As a small business owner I’m sure there are dozens of reasons that could cause you to start trying to get a small business loan. Some people apply so that they can expand, maybe into bigger space or into new markets, while others apply to help catch up on some bills. You might have an chance to make a discounted purchase on inventory or supplies in the event you can buy in bulk. Other businesses are very seasonal, so they look to acquire working capital when they are coming into their slow time of year, or when they’re about to come into their strong season and could stock up on inventory. Whatever the reason, one important thing that plays a big role in whether or not you’ll be able to get approved is how strong your application looks.
Many small business owners wait until they’re in a bad scenario to go out and look to get a solution in the form of a loan to get through some difficult times, and often once they start looking, things have gotten bad enough that they find it challenging to get approved. Most business people can sense when they are starting to struggle, whether that means bouncing a verify here or there, or having to scramble to make rent or payroll. In this type of economy, these things are not always in our control. Although we’d prefer to not need business loans at all, the truth is that most people do need to utilize some type of business funding at some point or another.
If you’re cash flow has already started to suffer, you could have waited too long. Lenders will look at your bank statements as a big part of the decision process when they are underwriting your application. Do all you can to avoid bouncing payments. It’s really important that you try as hard as you can to maintain a positive balance. If you find your bank balance getting close to negative, don’t wait. Apply for a loan now before it gets too bad to qualify. The worst case is that you borrowed money that you maybe didn’t need, but that’s better than running into a problem that you can’t solve.
You should maintain financials for any business that you run. If you don’t already do this, start this month. Something you’ll come across which could be very helpful is a statement of cash flow. It could really assist you to forecast a few of the problems that may be on the horizon according to recurring payments or invoices which have already been booked. This can be a valuable tool that can help you know when it is time to start applying to get a small business loan before it’s too late.
If you have to miss a payment to your landlord here or there, it’s not the worst thing in the world. This will come up later, but it will be easier to make that payment out of the proceeds of the loan than it is to explain to a lender why your account is constantly negative. Banks don’t want to see that you really need the money so badly. If they think that you’re going to go out of business if you don’t get this loan, they probably won’t approve you.
Though it may appear like common sense, all through the course of running a business and sustaining day-to-day operations, its easy to forget that there’s assistance available. Nevertheless, as with anything, you need to be in a position where you are a strong applicant if you hope to secure an affordable business loan and timing might be the biggest piece to that.
Something that may make a major difference when you’re looking for a business loan is understanding when to apply. You shouldn’t end up borrowing money you do not have the need for, but waiting too much may very well be detrimental and you’d rather manage an excessive amount than too little working capital.