Four hurdles to overcome when you are applying for small business loans

Article written by Boston Buyers Club

Financing is necessary to ensure your business reaches its goals successfully and on time. At present businesses have some financing options available, but choosing the right one for your small business can be a daunting process.

Piles of paperwork – Lenders will often request a lot of paperwork from business owners. Documents can include tax returns, credit reports, legal documents, bank statements, and business plans. To understand the necessary documents needed, visit your lender’s website or ask for a detailed list of necessary documents.

Credit score checks – Small business loans will often also include a personal credit check. A personal credit check will take place when a small business lacks credit history. If you have an unfavorable credit history, the chances are that you will receive a higher interest rate. In these instances, it is best to look at other loan options.

Personal liabilities – Often banks will ask you to place assets as collateral for the bank loan. Small businesses that don’t have sufficient assets to back their loans may be asked to place personal assets as collateral. Although this is an option, it may be a problem if your business finds it difficult to pay back the loan.

Approval process – Usually a standard approval process will take around seven working days. Once the bank informs you that your loan is approved, you will have to wait up to 60 days for the money to be deposited in your business’s bank account.