What do you need to get a business loan in 2019?
If you are planning to apply for a business loan, there are certain requirements you need to adhere by. Failing to meet these requirements, there are chances that your business loan application will be rejected.
Wondering what these requirements are? Continue reading to find your answer!
The most important requirement, in order to get a business loan for starters, is the business plan. The lending party needs to make sure that the money lent by them is used by the business in a profitable venture. Thus, if you are setting up a business, it is recommended to have a viable business plan that must show profitable results. Having such a plan in place will convince the lender and you will be able to get the amount.
Good Credit Score (Personal & Business)
The personal credit score of the owner and the credit score of the business both are scrutinized by the lender prior to approving a loan application. If you or your business has a poor credit score, there are high chances that your business loan will be rejected outrightly. You may get the loan amount if you are able to prove your creditworthiness.
Business Permit and License
A business needs to have a valid permit and license not only to conduct a business but to be able to apply for a business loan as well. If the business isn’t registered or doesn’t have a license, it can face difficulties in obtaining a loan.
Business loans are generally secured loans. This implies that these loans are secured by an asset or property kept as a collateral with the lender. The value of the collateral is a deciding factor in approving the loan application submitted by a business. Any asset i.e. a car, land, building, jewelry etc. can be used as a collateral. It is to be noted that if the business isn’t able to repay the loan amount on time, the lender can send the notice of an asset foreclosure to the borrower.
Business Profit History/Report
It is another important requirement in order to get a business loan. A lender, in order to ensure, the creditworthiness of a business, before approving its loan application, asks for its profit history or reports.
Balance sheet, bank statements, business tax returns, disclosure of other payable loans etc. are some of the statements the lender may require for processing loan application. These statements are required by the lender in order to validate the solvency of the applicant.
Information Related to Ownership of Business
In order to get a business loan, you must provide all the required information related to owners of the business to lenders. Furthermore, if the owners have other affiliations, the lender may also ask information related to them as well.
Take a note that business loan requirements may vary from lender to lender. However, f you are prepared with the requirements discussed above, there are chances that your loan application will get approved with facing any major difficulties.