Many small business owners may need additional financial support to keep their companies functioning during the pandemic. Many look to government small business loans or alternative lenders for assistance. Fortunately, applying for a small business loan isn’t as complicated as one may think. Of course, there are some things to avoid during the application process.
Small Business Loan Application Basics: What to Do
When taking out small business loans during the pandemic (or any time for that matter), you should have all of your updated and completed financial documentation readily available. The lending institution will ask for your most recent bank accounts statements to prove your monthly income. Having this information readily available speeds up the process of obtaining the financing you need for your business.
You should also have a clear idea of what you are utilizing the funds you receive for. This allows for you to fully explain your situation and why you need the funds. This can sometimes help when speaking with the underwriting team. If you are applying for a government loan, it’s imperative that you fully understand the utilization of the funds as this will be a question that is asked.
Examples of different types of government small business loans for COVID-19 include EIDL loans, SBA loans, and PPP loans.
Business Loans Do’s & Don’ts
When applying online for a small business loan due to the COVID-19 pandemic, make sure to do your research, and keep these do’s and don’ts in mind.
Do Compare Your Options
Make sure to thoroughly go through all of your loan options. By comparing lenders, you can determine which one has the best offers and terms. In most cases, business loans with online approval are the quickest and most convenient.
Don’t Exceed Your Limits
If your business doesn’t require much overhead, now may not be the time to take out a large loan for new equipment.
You should also consider only borrowing one loan at a time. Be mindful of how much income you bring in and whether the payment guidelines are manageable over the long term.
Don’t Stress Out
As difficult as it may be in these trying times, try to remain calm and avoid stress. Business finances can be challenging during even the best economic times. The good news is that expert financial advice can help you navigate this phase of business ownership. When you’re a business owner, stress management is extremely important for your wellbeing.
Don’t Stop at One Program
While taking out multiple loans is not always the best option, especially considering varying interest rates. Various programs can help support your financial goals, if they are needed. Many government grant programs, for example, may not require repayment. Be sure to consult with an expert to find out all your options before settling on a loan that may not best suit your needs.
What To Do Before You Apply
Before you are able to qualify for a small business loan and apply online, you’ll need to get your documents in order. Some examples of these financial documents include:
- Personal and business loan returns
- Personal and business bank statements
- Balance sheet
You will also need to know your credit history, the amount you want to borrow for the loan, and your collateral capacity (if any). Other important information to have is your business start date and your annual sales. With the proper preparation, you can apply for business financing in a few painless steps.
Need Business Financing Help?
If you’re ready to reach out to a financial advisor to start your application process, don’t hesitate. The sooner you apply, the sooner you can start your business recovery phase and stop worry about the future of your organization. Get your business back to business!
