Getting a Business Loan

May is Small Business Month! According to a 2019 study by the US Small Business Administration, small businesses generate 44% of US economic activity. That indicates that small businesses are vitally important to the wellbeing of our communities.

We appreciate the value of small businesses and want to do everything we can to support them and the people who run them. This month we’ll focus on topics that will help your business succeed and grow.

Business Loans

So you’ve turned your business idea from a dream on paper into the real deal. Or perhaps you are an established business ready to expand with new equipment or new locations. You’ve now decided that you would like to take out a business loan.

The key to getting the loan you need to succeed? Preparation!

Reasons for Getting a Loan

The most common reasons to apply for a business loan include:

• Buying real estate
• Getting more building space
• Buying equipment
• Investing in inventory
• Launching a new product

What You’ll Need

Business loans typically require lots of paperwork. You’ll likely need:

• Your personal credit history and credit score
• The credit history for your business
• Both personal and business financial statements (You also might want to include your debt-to-income ratio. Click here to use our DTI calculator!)
• Business plan, which includes a background on key stakeholders, including education and experience. Include how long you’ve been in business, the current state of the industry, growth rate, etc
• Projections for cash flow for the coming year
• Industry risk as rated by governmental SIC codes.

When you apply, all advance paperwork should be completely filled out. Ask your loan officer if you have questions.

What Lenders are Looking For

In order to qualify for a loan, your business should be on solid financial ground. In the best case scenario, that means showing that your business has been profitable for at least the last 3 years.

Primarily, there are 3 criteria you need to meet:

1. The purpose of the loan must be financially sound. That means you can’t use it for lending, gambling or pyramid schemes.
2. Have a good credit history. Stakeholders – including you and the key members of your management team – must have good credit.
3. Proof that you can pay the loan back. You or your business must have the assets to back the loan up. In many cases, you will be asked to guarantee the loan personally.

Do your research, prepare well in advance and fill out all the paperwork completely. Present your business in the best way possible while staying honest and accurate. Loans are available, and if you prepare adequately you have an excellent chance of getting what you need to make your dreams happen.

Are You Ready to Boost Your Business?

Horizon’s business loan experts are here to help you make your dreams happen! We love helping people grow their businesses and supporting local communities. If you’re ready to boost your business, give us a call at 208.258.2515 or click here to get started.

If you want to learn more about growing your small business, check out the resources in Horizon’s Financial Training Ground (scroll down Small Business Learning section). This content is free to members and non-members alike and is valuable for anybody looking to grow their small business.

Read more articles like this on HZCU’s Financial Knowledge Hub.