What Do I Need for a Small Business Loan?

Starting up a small business is an exciting journey. To ensure success, most businesses will apply for a loan. According to Forbes, about 34% of small businesses applied for a loan in 2021 alone, and even more are applying in 2024. If you’re new to the world of business loans, you might be wondering where you even start. Let’s look at a few things that a lender would want from you to get the application process started for products such as an SBA loan.

Personal Credit

The lender will definitely want to look at your personal credit. Although it’s possible to qualify for a business loan with a credit score as low as 500, the better your personal credit score is, the better interest rates you’ll get and the more you’ll be qualified to borrow. The interest rate alone can have a huge impact on how much payments may wind up being and that will eventually affect how much profit you’re able to reinvest into the business. Your personal credit score can affect your long-term success.

Time of Business Operation

For certain types of loans, the lender will want to see that the business has already been operating for at least six months to two years. This may seem counter-intuitive if you feel that you need the money in order to start the business. You’ll want to talk with an SBA loan expert to find out what options are available for different stages of your business.

Verifiable Cash Flow

It may also be required that you have active business checking accounts that will verify there is active, healthy cash flow in the business. This gives a sense of validity and helps the lender determine how much of a borrowing risk you are.

Types of Loans

You should be aware that there are many different types of loans available for business owners. These can include term loans, which are a traditional form of financing that is repaid over a set period of time. Another option could be a business line of credit. This is an amount of credit that the business owner can access over a revolving amount of time. An SBA loan is a Small Business Administration loan, which is a helpful product for small business owners. Speaking with a loan expert is the best way to learn about all of your different options.

These are just a few things you should know about taking out a business loan. If you’d like to learn more, please contact us today at Renaissance Community Loan Fund.