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Oct 23

How to Apply for a Business Loan

Reading Time: 2 mins

If you’re planning on starting a small business, or are planning on buying one, you may need to raise cash from personal resources. However, if you can borrow money on your business value, you can protect your personal credit and fund your business at the same time.

 

Finding the Best Loan for Your Small Business

Every small business is different. You may have a building you can use as collateral, or you may have long-term contracts that demonstrate long-term income security. When it’s time to put your business financial statement together, make sure to include potential income sources. You want to be honest, but you also want to be positive about your prospects, based off of history and growth trajectory.

 

What are Business Loans?

The best loan to have at your fingertips is a line of credit loan. Working specifically with one bank or lender will help you to build payment history so they can issue you such a line of credit.

 

How do you qualify for one?

You’ll need to have an easy to read financial statement submitted with your loan application. Your business plan may also need to be submitted, and you should have a detailed inventory of what your business owns in the event of a loan that needs collateral.

If your business is completely online, you may have good luck with a variety of online lenders. If possible, apply for a line of credit for your business, borrow against it, and build a good payment history. The primary benefit of a line of credit is that you can

  • get money quickly
  • pay it off efficiently
  • get a letter of credit for larger purchases

For example, if you have a manufacturing business and have the chance to buy a particular piece of machinery used at an auction, a letter declaring your line of credit availability will help if you win your bid.

 

How to find one

Rather than seeking out individual business loans or lines of credit, experts with Lantern Credit recommend reviewing loans in a bundle either by using their website or creating a list. That way, you can compare small business loans to find the best rates and qualities for your needs.

For example, you may be willing to pay a slightly higher interest rate early in the life of the loan as your new production line is brought up to speed, then pay off that loan more quickly so you can open a new facility or start a 2nd shift. The world of both small and large businesses are changing quickly at this time; a slightly higher interest rate or even a balloon loan may be a good choice for you as we break away from the limits of the pandemic.

At the end of the day, you need money to keep your business moving, grow your capacity and hire more people. Lenders need you to borrow to build their capital. Lantern Credit can bring businesses in need of a loan together with lenders who have capital.

 

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