Whether you are getting ready to expand or needing to offset inventory costs, having a clear understanding of the steps involved in applying for a loan will help you successfully secure business financing (without losing your mind). Here are some things to consider as you get started.

3 Steps to Get Approved for a Small Business Loan 

1. Where’s the money going?

Decide your reason for wanting a loan when thinking about what financing option is best for you. If you need to purchase a building, equipment, machinery, or other fixed business assets, look into SBA 504 loans. For funds to grow operations over time, term loans provide the cash in a lump sum. The money is repaid in increments over a set time frame. If you want to be ready for unforeseen expenses or need to cover short-term costs, a line of credit might be the best option. It affords more flexibility than a term loan since you only borrow to a certain credit limit. You can reuse the line of credit as needed and only pay interest on the amount you borrow.

2. Look for the skeletons in your closet

A business’s credit score surprisingly only plays a small part in loan approval, but lenders will be most interested in your personal credit history. They want to know how likely you are to default on payments. If you have a low credit score, you can expect to pay higher interest rates. Reach out to credit bureaus to get copies of your credit reports and read through the information thoroughly. Try to pay off those poor decisions made with a Kohls charge card and check for errors (FICO isn’t perfect, you know). The goal is to raise your credit score which will increase your chance of loan approval.

3. Dig through that file cabinet (or junk drawer - we don’t judge)

When it's time to submit, you're going to need a few important documents for the lender. Find out what information is needed before scheduling meetings or applying for business financing online. Think about things like personal and business tax returns, bank statements, lease agreements, and other business contracts. Basically, everything but the Declaration of Independence. 

For more help navigating business financing options for your company, reach out to the team at EDC Business and Community Partners in St. Peters, MO. The EDC offers month-to-month office and warehouse space, business consulting services funded by the SBA, and can help you apply for small business loans.

For small business help in St. Charles County, call (636) 441-6880. Check out the website for a closer look at financing options and check out their Facebook page for a list of upcoming events.