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If you haven’t had to apply for a business loan before, the process may seem a little daunting. There is no need to worry. At AKAL Mortgages, we will guide you as you search for the right small business loan to help your business take flight. Let’s take a closure look at business loans, and what you will need to bring when you apply.
What is a Business Loan?
A business loan is a financial loan where you borrow a set amount of fund for business (not personal) needs. You acquire the loan from a mortgage lender, and so will be expected to pay the loan back in a specified instalments over a certain amount of time.
Loans like this usually are used for things like purchase orders, purchasing inventory or equipment, or opening a new location. You can let your business grow by taking out a small business loan, saving money to run the business rather than just buying assets.
It often takes about 12 weeks to get a business loan.Contact Us
What is a Business Loan Good For?
There are countless reasons why a small business loan could help you. There are a few reasons that a just a bit more common than others. Business loans are good when you are planning on expanding. You’ve outgrown your current location and have an increase of customers coming in and out. Credit building for the future is also a reason to get a business loan. By getting a small loan now, you are building credit for a few years down the road when you may need better credit for a bigger loan. The need for equipment can make it necessary to get a loan. Sometimes to improve your business, you need to get new, better, or specialized equipment but need the money. Business loans are good when you need inventory. The biggest expense for a business is inventory. You are constantly keeping above the demand. A loan can help you get the inventory you need. When a business opportunity comes along, sometimes you need to grab it, even if you don’t have the cash. Getting a loan will enable you to make it happen.
How To Qualify For a Business Loan
Lenders will want to see if you have capital, a good credit score and credit history, ability to pay off the loan, collateral and past business experience. Here is a more detailed list of what you will need to qualify for a business loan.
- Financial Statements: Lenders will want to see if your business is good financially, and look at the income you have coming in, plus your business expenses. Your financial statements will show the lenders you have the ability to pay back your business loan.
- Business Plan: Usually lenders will want to see you have a detailed business plan with objectives on how you will be using the funds. If you have trade references, bring that information too.
- Capital Business Assets: You may be asked for specific collateral, some lenders may accept a lien on your business.
- Income: Lenders like to know your personal income, as well as having taxes up-to-date filed taxes. This shows financial health.
- Resume: Have a personal resume prepared, and resumes for anyone else who is involved in your business.
- Collateral: You will need collateral evidence to secure a business loan. Real estate can be used, and in this case the lender will request an appraisal.
Documents Needed for a Small Business Loan
There is a list of required documents you should have handy for a small business loan application process. It is a good idea to be prepared, as each mortgage lender or financial institution has their own requirements. You should be covered if you have the following documents:
- personal identification card
- business plan
- financial projections
- three years of federal tax returns (personal)
- management resume
- management resume
- SBA Form 413 (Personal Financial Statement)
- SBA Form 1919 (Borrower Information)
If you have interests in other business, you will need to bring information on them as well. If you are buying an existing business, you will need three years of Federal Business Tax Returns, current interim financials (profit and loss balance sheet,) and a letter of intent or purchase agreement. You will also need to bring an equipment list, final purchase agreement, and a business evaluation.
AKAL Mortgages is here to help you achieve your financial dreams, both business and personal, today. Come speak with us today and let us get your dreams coming true.
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