As a female entrepreneur, finances are likely always on your mind. But if you’re hoping or planning to start a new small business soon, money can cause even more stress than usual. Not a lot of people have the capital laying around to fund their small business. And for this reason, almost every entrepreneur has to borrow money at one point or another. However, this can be a challenge if you don’t know what to expect from the loan application process. So to help businesswomen who find themselves on this path, here are three tips to help you find the best loan for your new business.
Look At Both Banks and Online Lenders
While many people automatically think about visiting a bank when they’re looking to take out a business loan, Saundra Latham, a contributor to TheSimpleDollar.com, shares that it is often extremely hard for people to get business loans from a bank. Although Latham does recommend that you still go to a bank and attempt to get a business loan from them, she also states that you should approach certain online lenders as well. While you may be able to get a lower interest rate if you get your loan from the bank, online lenders make the process much easier to complete successfully.
Know What Lenders Are Looking For
So what exactly is it that lenders are looking for when you apply for a business loan? According to Ty Kiisel, a contributor to Forbes.com, most lenders are looking for what he calls “The 5 C’s” of business loans. This list of necessary credentials includes character, capital, collateral, credit and capacity. If any one of these five areas is lacking, it can be extremely difficult for a lender, especially a bank, to be willing to lend you money. You just may appear to be too risky for them. But by knowing and understanding the criteria in which lenders make their loan approval decisions, you can better prepare your application.
Now that we know what lenders want from a small business owner, there are a few things you can do to make yourself and your company more enticing in these areas. Caron Beesley, a contributor to the U.S. Small Business Administration, shares that the best ways to prepare before attempting to obtain a business loan are to create a solid and understandable business plan, get your credit score as good as you can, and talk to someone in the lending industry about the details you should look for in the best business loan for you. Preparing in these three ways will help make your business more appealing to lenders and get you the perfect small business loan.
Although getting a small business loan can be a long and arduous process, using the tips mentioned above can help to make getting the funding you need for your next business dream a reality.