No matter the size of the business, whether a startup or an established company, many rely on financing as a catalyst for growth, or even as a means to get through tough times when operating capital is limited. Often businesses find themselves in need of additional cash flow to navigate the challenges that come with today's economic environment, and the question presents itself, “how hard is it to get a business loan?”
The truth is that it varies and mainly varies on the history and financial position of your business. Personal credit score and finances can also impact your chance of approval too. Thankfully, there are resources to help you understand if you’ll qualify or what steps you need to take to qualify for a business loan. It’s important for business owners to know what qualifies them for a business loan and what factors lenders are focusing on. At mySMBscore you can view your business credit profile through the eyes of a lender. Plus, you can connect with lenders that can offer a business loan.
Financing through a business loan can provide access to the resources that are needed to both expand the business and fund day-to-day operations. Read on to learn more about how to get a business loan.
Lenders want to know the business's ability to repay the loan, which is generally determined by the following business loan requirements and approval factors:
Utilizing the tools provided by mySMBscore, you can determine how likely you are to get approved for a loan by monitoring your industry score, which tracks the key metrics lenders will use to determine your eligibility.
When asking a lender to loan you money - it’s reasonable to assume they will want to know a few things about you and your financial history, as well as your business. Here are some challenges you may encounter in pursuit of a business loan.
With personalized loan offers and access to loan specialists, mySMBscore can help you find the right lender and type of loan that is best suited for your business. MySMBscore is a valuable starting point for businesses in the market or soon-to-be in the market for a business loan or financing.
Approval rates are subject to a variety of factors, including economic conditions, individual financial qualifications, and the type of loan you’re looking to secure.
Here is a general breakdown of the various types of business loans and typical requirements:
To find out what your business might realistically qualify for, check loan offers with no credit impact at mySMBscore.
Most lenders are going to want to see a credit score between 640-700 to qualify for a business loan. However, there will be other requirements to meet as well such as time in business, annual revenues, and so forth.
It’s important to remember that credit score and other requirements can vary depending on the lender and the type of loan. In general, the better your credit score - the higher chance of approval and the more likely terms will be favorable. Even though you’re pursuing a business loan, chances are your personal credit score will be considered, especially if you’re a small business. If you’re in the infant stages of starting a business you might need to consider a personal loan instead. Once you’ve established enough history in business, one day in the near future you can graduate to a business loan.
With that being said, information is key. At mySMBscore you can utilize our technology to check your business score, view the financial health of your business as a lender would see it, and find lenders that can help. The ability to assess and understand the financial standing of your business through the eyes of a lender will empower you in many ways. First, it can help you understand areas you should improve before applying for a loan. Second, it can help you prepare for how much you might be able to borrow and what it might cost. Third, it can open the door to connect with lenders that are willing to extend your business a loan.
Establishing and maintaining a good credit score, both personally and for the business, can greatly increase your odds of getting approved for a business loan. Regarding your personal credit score, this can be done by paying down outstanding debt and making timely payments. Regarding your business, Beyond easy access to monitoring your business score, mySMBscore proprietary business score and dashboard helps show business owners what factors and financial ratios affect your standing in the eyes of lending institutions. By understanding those factors, you can take steps to improve your business score and increase the likelihood of received funding at a low rate.
In addition to improving credit reports, creating a strong business plan can show lenders how your business will utilize the funding and how it plans to repay the loan. Boosting sales growth can also increase a business's chances of obtaining financing, as lenders believe that growing companies are better suited to meet loan repayment obligations.
Getting a loan to start a business is often more challenging than getting approved as an established business, as lenders have no history to gauge the financial stability of the business. Startup business loans may require a personal guarantee or be extended based solely on the owner's personal credit score and or assets. Startups in pursuit of a business loan should create a strong business plan to show lenders how their business will be able to afford the loan repayments.
Businesses of all sizes rely on financing to maintain operations and to fund growth. It’s essential for businesses to educate themselves on the criteria that lenders will examine when applying for loans and to explore the different loan options available.
With tools like mySMBscore, you can track your industry score based on your business's financial data and see the key lending metrics banks generally used to determine loan eligibility. Knowing how lenders view your business can provide a more realistic idea of what options may be available. As a great resource to connect with various lenders, mySMBscore can also assist with finding the right lender that can provide the financing option best suited for your business needs.