Important Business Loan Facts
For any entrepreneur, experienced or not, beginning a startup company requires a lot of jumping over hurdles, as well as getting that evasive capital that is so essential now. For most business owners, we go to the bank, and we acquire the necessary funds through a business loan, but unfortunately, it is not that easy nowadays. Various issues stand in the way of you getting that business loan, and here are a few for you to think about.
A Poor Credit Score
Much like when you are looking at getting a personal loan, this is one of the first things that any lender will go over when looking at your application. Of course, a bad credit score will make lenders wary of giving any sort of finance to you. Because you are showing that you are unable to meet the necessary obligations. The solution would be that you can begin to repair your low credit score right now, by getting your balances sorted and under control.
A Questionable Past
Lots of small business loan organizations require your business to show good character. A lot of these organizations will ask for a statement of personal history so they can assess your character accordingly. This means they will ask you if you’ve been charged with any illegal activity, also something like minor offenses that you are likely to have done in your teenage years won’t affect the outcome.there are considerable obstacles when you are looking to start up a business.Click To Tweet
But if you got DUI lawyers involved, or something of that magnitude, this might not necessarily wreck your chances of a business loan, but it will potentially have a sizeable impact. It all depends on how many felonies you have been guilty of in the past. Depending on the severity of the felony, if you have recent small, petty felonies, these could be resolved in a few weeks, but more sizeable criminal activity could take a few months to clear up.
The Amount Of Time You’ve Been In Business
Lots of small business owners rely on getting a loan to kick-start the company. But lots of banks will expect you to have been trading for at least two years. Most loans require two years’ worth of tax returns, so they can assess the gross and net profits. The solutions for this would include going to alternative resources, such as crowdfunding, peer to peer lenders, or some online resources. But for a lot of these resources, it is required that you have something as collateral, such as your home or a vehicle.
You may have a perfect credit score, and everything you need in place, but you could still be turned down. Unfortunately, this is due to outside influences, and this could be relating to economic trends, the local rules, and regulations, or even competitors. These things are few and far between, but you do need to bear this in mind if approaching any organization for a business loan.
It’s not an easy pill to swallow, but there are considerable obstacles when you are looking to start up a business. So, it’s important to consider your options before entering the door of that bank and learn all the loan facts you need to know.