Taking the Mystery Out of Small Business Lending Practices
Launching or growing a small business involves a lot of moving parts that all require tracking. Along with keeping your customers happy, you're busy managing expenses, dealing with logistical requirements, coordinating employees, and much more.
If you're applying for a small business loan to grow your business, your list of action items is even longer. You need to finalize your business plan, get all your financials in order, shop for the perfect loan product, complete your application — it may seem like the list grows every minute.
Need a Small Business Loan?
1. Annual Revenue
2. Time in Business
In general, businesses that have been operational for more than two years are typically the most fundable. If you've made it through your first year of business, you likely still have options. But if you've been in business for less than a year, you may have a harder time being approved for a small business loan.
Unfortunately, unless you happen to have a DeLorean handy, this one is pretty much out of your control. If you're struggling to secure funding for your brand new business, the best you can do is wait and apply again when your business has a little more time — and revenue history — under its belt.
3. Average Bank Balance
Your average bank balance tells your lender three things: the health of your cash flow, the profitability of your business, and the financial cushion you have on hand. Even if your sales numbers are fantastic, a low or even negative bank balance will raise eyebrows about your ability to cover your loan payments on time, every time.
For maximum fundability, aim for an average bank balance of at least $10,000. If that feels out of reach, anything over $1,000 will help your loan eligibility.
For more lending factors and tips, read the full article on The Huffington Post.