If you’re in charge of a small business, access to credit is vitally important. Here are the factors that may stand in the way of your ability to get a small business loan.
Bad Credit History
One of the most troublesome issues many small business owners have to contend with is their own personal credit history. That’s the bad news. The good news? You need to get past this issue and increase your credit score. Make sure the credit reporting company knows that you’re making such changes. Paying your bills on time and paying down debt can boost your credit score again and make it easier to get the loans you want.
Not Enough Cash
All small business owners should know terms like cash flow. This is a measure of how much money is flowing into your business at any time. You might have had an issue with weak cash flow in the past as well as right now. Many factors, such as a temporary lack of inventory, can contribute to this problem. It’s a good idea to know what they are before you make any kind of loan application.
A Poor Business Plan
A good business plan is a must. As the experts at Lantern by SoFi remind their customers, “Running a business is challenging.” That is one of many reasons why it helps to have a business plan in place. Any small business owner should have one that allows them to understand what they need to get done and done and how to do it. Tools that allow people to do things such as compare small business loans online with Lantern. That can help anyone fine-tune their existing business plan and make it work better.
Lack of Documentation
Applying for a loan is a serious process. The company loaning the money wants to make sure you have the right documentation. You need to ensure you can answer their questions and show who you are, what you do and where you’ve been. You need to give a detailed account of all aspects of your current business venture as well as other ventures you’ve done in the past. Items like balance sheets as well as all your business and personal tax documents will help any loan officer work with you,
Doing It All By Yourself
Each person brings something of importance to the table. No one can really do it all. If you have only a certain level of expertise, you might be refused a small business loan because they don’t think you can pull it off on your own. That is why it helps to have other people along for the ride. They can offer you much-needed assistance and demonstrate that you have a team of experts at your side to help you run that business.
When you know what impediments are in your way, it’s easier to remove them.