The best way to grow your business is to seek low-cost funds that you can use to pay off high-interest debt, hire new employees, purchase equipment, increase marketing and more.
But before you seek a lender, check out these funding fumbles that can slow you down or cost you money!
Being disorganized in your personal life is a nuisance, if you’re disorganized in your business life, you can wreck your chances of easily applying for and getting a loan. Each lender has different document requirements. Investigate what is needed and make sure you have up-to-date paperwork ready to go before you start the loan process. Investopedia has a great article that can help you get started: 8 Steps To An Organized Financial Life.
Not asking for enough money or asking for too much
Before you start investigating funding for your small business, you need to do the math. Know exactly how much you need to borrow to meet short and long-term goals. Two documents will help you determine this – your business plan and cash flow analysis. Do a deep dive into each to determine if you’re asking for the right amount to help grow your small business.
Not paying attention to your personal and business credit ratings
Actively managing your personal and business credit scores can help you secure more financing at better terms. Good business credit can also ensure that you get financing when it’s needed. To learn more about business and personal credit scores, check out our article 3 Things Small Business Owners Need to Know About Credit Scores.
Not counting all costs
Application and origination fees, service charges and annual charges – these are just some of the charges lenders might apply to your loans. Money isn’t free but some money costs way more than it should. Dishonest lenders add random fees – they count on small business owners not reading the fine print. So read the fine print before you sign on the dotted line and ask your lender to disclose all costs upfront.
Not investigating an SBA loan first
SBA loans have the lowest rates and longest terms around – they’re the best bet for small business owners. However, the SBA loan process has a poor image. Many small business owners have heard that the process is tedious and rejections are frequent. Don’t believe everything you’ve heard! SmartBiz has turned the arduous process around with its streamlined, online process. You can discover in 5 minutes or less if your business is qualified for a low-interest SBA loan here. Once you qualify, it’s simple to upload the required documents. A dedicated relationship manager provides each borrower with “concierge service” to guide them through the process. To learn more, check out this SmartBiz blog article, What is the SBA? What is an SBA Loan?. Small business owners seeking a SmartBiz SBA loan must be a U.S. citizen or legal permanent resident with good credit and no bankruptcies or foreclosures in the last 3 years. You must have the cash flow to support loan payments and in business for 2+ years. Learn more about the SmartBiz requirements and processes here.