Applying for a small business loan can be a nail-biting experience. You can improve your chances of success by putting yourself in the bank’s shoes: consider the qualities they’re looking for in an ideal applicant. When you understand what makes an attractive borrower to the banks in Gillette, Wyoming, you can put your best foot forward and strive to meet those criteria.
6 Factors That Can Help You Get a Small Business Loan
Good Credit Score
For most business loans, you’ll need strong business credit and also a respectable personal credit score of 690 or higher. Your personal credit score matters because it provides information on how you handle money and debt.
To improve your business credit score, pay your bills on time, establish credit accounts with suppliers, and keep your public records clean. You can build up your personal credit score by lowering your credit utilization rates, keeping old debt accounts open, and disputing any errors on your reports.
Two Years in Business
Most banks will also require a business to have been in operation for at least two years. This is because once a small business reaches the two-year mark, it’s statistically far more likely to continue to grow and succeed.
$100,000 Annual Revenue
You’ll find that most lenders have a minimum annual or monthly revenue threshold for their business loans. This revenue threshold is typically around $100,000. But the figure can vary, so you’ll need to inquire with each bank you apply with.
Business Collateral
You may have to offer business collateral to secure your loan. This collateral is often business assets such as real estate, equipment, or inventory. Sometimes a personal guarantee will be accepted instead of collateral.
Strong Business Plan
A well-written business plan is another common requirement. Your business plan should explain positive financial projections, how you intend to use the loan money, and how you’ll repay it.
Your plan should also ideally show how your business is in a high-growth, low-risk industry. In addition to the business plan, a loan proposal may also be required for extra detail on how the loan money will be spent.
Correct Documentation
Banks also typically need a great of paperwork before granting a business loan. This might include all financial documents relating to your business such as bank statements, income statements, balance sheets, profit and loss statements, and prior tax returns.
You might also be asked for business licenses, commercial leases, certificates of corporation, legal contracts, personal bank statements, and personal tax returns. A personal resume might also be requested, which should showcase your relevant experience in business or management.
Request Further Guidance at Banks in Gillette, Wyoming
If you’re growing a small business in Gillette Wyoming, a local bank such as Security State Bank can give you the personal attention and financial support you need. And for further guidance on what makes an ideal business loan applicant, you can always visit your local banks and request a talk with their business loan specialist. They’re sure to be happy to answer your questions and offer advice.
Applying for a loan to grow your small business becomes a great deal easier when you know the goalposts to aim for. With these six criteria in mind, you’ll find it easier to prepare, apply with confidence, and successfully gain the financing you need.
