Read this article to learn the top four tips to qualify for small business loans in Charlotte, NC.
mediaimage
Getting small business loans in Charlotte, NC, can take a lot of time. But if you know whether you meet a lender’s qualifications in advance, you can avoid potential frustration and hassles.
Below are five steps that you should take to qualify for a small business loan.
#1 Build Good Personal and Business Credit Scores
Personal credit scores reflect your ability to repay personal debts, such as a mortgage or car loan and credit cards. Small business lenders need a personal credit score because they want to learn how you manage your debt. The higher your score, the better are your chances of getting a loan.
One of the quickest ways to improve your personal credit score is paying bills on time and in full and disputing any inaccuracies in your report.
You can build good business credit by keeping public records clean and establishing trade lines.
You would require good personal credit and excellent business credit to get small business loans in Charlotte, NC, from banks or a government-backed SBA loan. However, online lenders may be more flexible with credit scores, emphasizing your track record and company’s cash flow instead.
#2 Develop a Strong Business Plan
Lenders would want to know how you plan to use the money and see that you have a strong ability to pay. They may ask for a business plan that includes the loan’s purpose and how you expect it to increase profits.
Your business plan should also include the following information:
Ï Business description
Ï Product or service details
Ï Industry analysis
Ï SWOT analysis
Ï Management team
Ï Operations plan
Ï Current and projected financials
Ï Sales and marketing strategy
Your business plan should clearly demonstrate that you won’t have cash flow problems to cover ongoing company expenses and the new loan payments. It will give lenders confidence in your business, and you would most likely get the required small business loans in Charlotte, NC.
#3 Get Your Legal and Financial Documents Ready
You need to do a lot of paperwork when you apply for small business loans in Charlotte, NC, from banks and other traditional lenders. Some of the legal and financial documents you must need are:
Ï Business license
Ï Articles of incorporation
Ï Personal and business income tax returns
Ï Personal and business bank statements
Ï Balance sheet and income statements
Ï Financial projections if you have a limited operating history
If you have strong business finances and a good credit score, some online lenders may provide you rates comparable to bank loans. They may even require fewer documents and offer faster underwriting.
#4 Provide Collateral
To qualify for small business loans in Charlotte, NC, you may need to produce collateral to back the loan. It’s a way lenders can recover their money if your business fails.
Some online lenders may not need collateral, though but would ask for a personal guarantee. Each lender has its own rules, so make sure you ask enough questions if you are clueless about what’s required.
If you don’t have collateral, unsecured business loans could be a better option.