Personal loans are a common solution for individuals in need of money. If you’re looking to start or grow your small business, though, a small business loan may be the better option. Small business loans can provide you with the funds you need to achieve your goals, enabling you to borrow larger amounts while keeping your business expenses separate from your personal ones.
Obtaining a business loan is a bit more involved than a personal loan. If you need funding for your business, here’s what you need to know about getting a small business loan.
Prove Your Financial Need
You may feel confident that borrowing money will help you grow your business, but you will need to convince your lender. To do so, you need to prove how a small business loan will help. This needs to be done without exaggerating any information.
The Role of Your Business Plan
One of the best ways to prove how a business loan can help your small business grow is with a business plan. If you haven’t created yours yet, you will need to do so before you apply. Be sure to include information about your long-term strategy as well as information about the essential people in your business.
Applying for a small business loan requires you to get your finances in order. Lenders need to see a successful borrowing history before they’ll approve an application.
If your business doesn’t have a long borrowing history (or it’s new and has no borrowing history) the lender will look to your personal credit history instead. A good credit score lets potential lenders know you’re a good risk and are therefore more likely to approve your loan.
In addition to having a good credit score, collateral can help to increase your chances of approval. Business assets like equipment or vehicles can be used to secure the loan. In some cases, personal property may be used.
Some lenders will require a personal guarantee as well. Should you default on the loan or have your business go under, you are held personally responsible for repaying the balance.
Find Your Lender
When you’re ready to apply for a business loan, it’s time to find a lender. Today, you have several options.
One of the most common places to start is a traditional bank. You can find a large bank, a local bank, or a credit union. You can also find small business loans through online lenders or microloan lenders.
Reasons to Choose a Local Lender
While all business loan lenders have their pros and cons, a local bank has several significant advantages.
One of the biggest advantages to a local bank like Western Bank is that you get a personalized touch and your small business loan can be tailored to meet your unique needs. You work in-person with someone who lives in and understands your community and local needs. For a small business operating within a local community, this makes much more sense than working with an online microloan lender that you don’t know much about or that doesn’t know much about the community.
In addition to working with real people with a vested interest in your community, getting a business loan from a local bank also helps your local economy. Local banks have more leeway to provide loans for businesses that might not qualify for a loan from a large financial institution. Banks like Western can help you find the right solutions for your needs, allowing you to grow, create jobs, and give your local economy a boost.
A small business loan can help you to accomplish your business goals, allowing you to thrive and grow. For more information about small business loans, and to find out how we can help, contact Western Bank today!