How to get a loan for your Small Business- Eligibility and Requirements

Moneylenders are financing for small business loans but while they may be letting money off from their vaults, being eligible for the same is not an easy process. The key to being eligible for small business loans is a good business and personal credit score. For small businesses, in flow of cash is required to help fun new development and expand research areas to hire new professionals and making sales efforts. There are certain odds that you have to take care of before you apply for a small business loan to become eligible for it.

Primarily, apply for a loan beforehand. Do not wait until the last moment. It might sound a little counterintuitive to ask for loan before even you require it. However, the process of acquiring loan and doing all the paper works is much less stressful than doing it at the very last minute of all. Many financial advisors have other tips that you may follow to make the loan process dent free. Let us look at some of them below:

• ELIGIBILITY REQUIREMENTS

Before you walk through the loan process, determine the eligibility criteria by doing a thorough research of the partners you can ask for loans. They may be banks, micro enterprise lenders, SBA or any other economic development organizations. The general requirements for eligibility are roughly:

FICO score– higher the personal credit score, better is your chance to become eligible for the loan. The FICO score is more commonly used in loaning decisions. A score of 650+ is recommended.

Collateral - to get a loan approved, it is advisable to produce collaterals on the table.

Revenue – Show revenue of your income. Loans are easily approved if your business is a profitable one.’

Clear all defaults– debts and defaults pose a negative impression on your personal and business credit score. Make sure there are no un-cleared debts, before you apply for the loan.

• LEGAL DOCUMENTS AND PAPERWORK

Any organization who would approve your loan would ask for a wide range of legal documents and financial paperwork for the application. These include:

• Trade license
• Driver’s license
• Bank statements
• Business experience
• Commercial lease
• Income and revenue statement
• Tax returns

If you acquire good credit and strong finance supporter, the process will be hassle free and you will be get your loan.

• BUSINESS PLAN

Whether it is a new startup company or an established small-scale business firm, a good business plan will speak for you as to why you need the loan and how fast you can repay the loan. It should consist of your project statement and how will you profit from it. The type of asset you will produce to make your loan secure. An analysis of the plan will speak of how well established you are or you can be in the business field.

Applying for a loan and becoming eligible for it is a complicated procedure, but the more organized your thoughts are and the more attentively you carry out the application, paperwork and the business plan, the nearer you are to securing your loan. There is a myriad of financial lenders, researching on their criteria and eligibility will take you close and increase the odds to obtaining a secured small business loan.