As an advocate for small to mid-size businesses (I am one) I give a word of caution when shopping for a loan. DO NOT shop 2 or 3 lending or credit institutions at once, every time you go they pull your credit and you get a “ding”.
- Do your homework, Google can save you time and energy and money, shop on line for lenders who favor your type of business, i.e. best lenders for restaurants, machine shop, start up, poor credit etc. We actually do this for you with our vast pool of national lenders and partners.
- Go to credit agencies where you can get a full and free credit report without “a ding”-like Credit karma (free). We will use this report to shop for you-without all the “dings”
- Once you obtain your report see what you need to correct or challenge on any information in the report.
- Have a game plan, why you need the money, how it will help grow your business, or start your business.
- Correct BEFORE you apply, or at least have a reasonable explanation.
- Find a lender who will initially accept the credit report you have provided to see if you can qualify with that lender. We do that with our 30 second app-we shop multiple lenders, in most subprime (non-bank) lenders once they turn you down that’s it.
- Many lenders will have an on-line see if you qualify without affecting your credit (we do), it helps give you the direction for your next steps. The problem as stated above they are generally a single source self-funded group. So if they turn you down you need to start over-not good.
- If you are generally under 5 years in business and walk into a bank, you are turned down before you even speak, and your officer of the month is probably still in training so …you know where that goes.
- Make sure you have all your documentation in order (read our loan 101 on our website). Most get turned down because of paperwork. We underwrite our loans so we know what is missing and will help you obtain it. Plus, we know where to send the application, unlike most lenders we actually LOOK AT THE LOAN and YOU
- Make sure you can actually pay back the loan, use our calculators to see what your payments and amortization schedule will be, adjust to meet your cash flow.
Simple steps to help you obtain the financing necessary for your business…oh, and read the fine print before you sign.
Fueling Business Dreams since 1996
Frank J. Eberhart, CEP® RFC® Author