Applying for business financing can be intimidating, whether it’s your first time or you have received loans in the past. When you know that you will need business financing in the future, the best thing you can do is start locating financial documents now. Some of the documentation requirements of your lender might include a profit and loss statement, business plan, business tax returns for the last two years, and current bank statements. Lenders use these documents along with the information you provide on the application to determine if your business is an acceptable credit risk.
Know Your Business and Personal Credit Scores
Depending on the size of your loan and the financial strength of your business, some lenders will pull both business and personal credit files. Lenders are most interested in your credit score from these reports. Business credit scores range from zero to 100 while personal credit scores range from 300 to 850. Any score above 80 on your business credit file and 720 on your personal credit file ranks in the excellent range. While your lender might not require a score that high, keep in mind that better scores can get you lower interest rates and more favorable repayment terms.
As a business owner and consumer, you have the right to view the information contained in your credit files. We recommend that you obtain a copy one to two months before applying for business financing. This timeline gives you the chance to correct any errors you spot before a lender looks at your files later.
How to Use Your Business Loan
Most lenders allow loan applicants to use business financing in any way they see fit. The one exception to this would be specific loans such as a business equipment loan that you would need to use for that purpose only. Increasing working capital or cash flow is one of the most common uses of business financing.
Perhaps you have already applied for a small business loan only to receive a denial or you feel overwhelmed by the loan requirements. Working with Adventure Capital Group gives you greater flexibility with your financing options. Please contact us today to learn more.