The process of applying for a small-business loan can be intimidating, with the possibility for making mistakes. It is a process that involves a high level of risk. The process is often lengthy and involves a lot of work. These factors can all be intimidating when combined. There are ways to increase your chances of receiving a loan. Don’t worry about making common mistakes when applying for a business loan. You won’t miss out on funding. We’ve compiled four of the most common issues that businesses encounter and show you how to avoid them. Apply for a business loan with confidence.
1. You may not know your credit score
Credit score has a major impact on the loan you get. It is used by lenders to determine the risk that you represent. It can affect your interest rate, total cost of loan, amount you can receive and other factors. One of the biggest mistakes in business loan applications is not knowing your credit rating.
The federal government, in collaboration with three of the largest credit scoring companies, has created a website that allows you to check your score for free once a year. You can check your credit score without any negative consequences. It’s important to be informed before applying for a loan.
You can improve your credit score by:
* Check for unauthorized credit.
* Look for errors, either your own or those of the clerical staff.
You can improve your credit score by paying off smaller debts.
Knowing and optimizing your credit score can help you get the loan that you need.
2. You may not be working with the right type of lender
Banks and alternative lending work very differently. The process with banks is very structured. They use manual, long-standing systems to approve loan applications, making them labor-intensive and high-touch. This is a great thing when you’re looking for a large loan with lots of consulting, but it can be a problem if you need money fast.
Alternative lenders are largely digital. You can get cash fast and smaller loans. Some don’t provide much consultation. We offer some guidance and advice at QuickBridge to ensure you receive the best loan.
It’s dangerous to not think about the right lender when you are applying for a business loan. This can lead to a rejection of your application and wasted weeks or even months.
3. Look Beyond the Rate
The interest rates and costs associated with a loan is important. It’s a mistake to use them as the sole factor when choosing a loan. This is one of the mistakes you can make when applying for a business loan. You could miss out on a great opportunity. When choosing the right loan, consider value more than cost. For example, some loans have higher fees or rates, but they can get you the cash quicker and help your business grow right away. A loan with a lower cost may come with a longer repayment period and delayed value. You can see that it is important to strike a balance between the cost of your business and its potential.
4. You may not have your paperwork in order
Documentation should not be a barrier to your loan. You’ll have to be very organized when dealing with banks. Alternative lenders do not require as much documentation. Do some research into the lending process, and ensure you have all your paperwork ready.
Avoid these common mistakes when applying for a business loan
It is easy to avoid making mistakes when applying for a business loan. You can get the best loan by researching the lending process. Contact QuickBridge to find out more. We would be happy to discuss our process with you and help you obtain the loan that your business requires.
