Over the past decade the number of small loan applications for business purposes has significantly increased. Regardless of the economic instability all over the world, young entrepreneurs become braver and more confident in their business’ future. Most of them require any type of loan for business when the company starts to grow and the money for expansion is needed. So in order to help you get the desired loan we prepared four simple tips in the article below.
Get your finances and documentation in order
As a rule, lenders of loans for restaurants require small business owners to provide documentation about the profit of the business over the past three years only to qualify for a loan. Besides the standard requirement your documents will be looked at closely, and special attention will be paid to the credit history. So you need to make sure that when applying both your personal and business credit histories look stable and promising to be eligible for a bad credit business loan.
Tell your story
According to bad credit business loan lenders, the worst frequent mistake made by restaurants owners is not telling about their companies and paths and so explaining why they need money. As a rule, such behavior is regarded as the lack of evidence for the loan approval. But be careful, ‘telling a story’ means facts. You have not only to tell the lender ‘why’ but also show documents and proofs of that ‘why’.
It is usually harder to get loans for restaurants at big banks and especially in national bank systems. But do not despair, because you can always find a local company to help you get a bad credit business loan. For instance, you can go to a community bank or check possible loan programs. The only ‘price’ that you will have to pay for this easier way out is the amount and length of paperwork. But in this case you definitely get higher chances for a small loan approval.
Look at alternatives
As today a lot of historically profitable or growth-stage companies actually face shortfalls in cash flow, alternative financing has become very popular in recent years. According to bad credit business loan experts asset-based lending and factoring are great alternatives for many businesses.
Factoring by the definition means that your company sells the accounts receivable. By doing so it gets a short-term loan of up to 80 percent of the company’s value. On the other hand, you may have an option of asset-based lending which is more similar to the traditional loan process. With this option a lender evaluates your business’ accounts receivable, then checks inventory values and fixed assets in order to determine the company’s creditworthiness, and then issue a line of credit. In case you cannot qualify for traditional bank loan system, check these possible backups.
Elena Carr is a reviewer for a number of digital content networks, who covers various financing themes for instance such as bad credit business loan and anything else related. A tireless traveler of online community and an influence in anything noteworthy for the financing.
Thinking Capital Small Business Loans Provider
174 Spadina Avenue Suite 304
Toronto ON M5T 2C2