To obtain a business loan, first determine the purpose of the business loan, e.g., do you need funds to purchase equipment or cover seasonal cash flow gaps. Next, decide on which type of loan is right for your business. Now you’re able to list the lenders that offer the type of business loan you need.
Check out those lenders to evaluate whether or not you qualify for the business loan. Learn more about the application process and required documents.
Follow these steps to help you clarify your goals and assess your business’s financial health.
How to apply for a business loan?
Once you have defined the purpose and value of the business loan, it’s time to approach your selected lender. Application processes differ depending on the lender.
In most cases, you will need to provide your financial information and business documents. Depending on the funding institution, lenders may ask for a business plan and cash flow analysis. Some institutions will also require collateral. Online lenders usually only need your ID and recent bank statements.
Lenders typically check your credit history during the application process.
Where to get a business loan with no credit?
Lenders will base their decisions, in part, on your credit rating. But, it’s not impossible to secure a business loan with a limited credit history.
Lulalend’s credit team explained that your current level of debt and payment history will influence your credit rating. When you submit your business loan application, lenders will access data about your credit history from the credit bureaus.
Alternative funders use several data sources to assess your credit application. This approach improves your odds of obtaining a business loan with a limited credit score.
How long does a business loan take to get approved?
The time from application to approval depends on the funder. For instance, it could take several weeks for your application to be approved. On the other hand, online lenders make an instant decision.
How do business loans work?
Funders give you capital to grow your business. You agree to pay back the business over a set period of time, with interest. Typically, you’ll pay monthly installments.
What is needed to apply for a business loan?
Common requirements include business turnover, trading history, and credit rating. There are creditors that will ask for your business plan, financial statements, and cash flow projections.
Traditional funders will require collateral, like equipment or property.
What documentation is required for a business loan?
Here is some of the documents you will need:
South African ID
Cash flow statements
Some banks will also need your registration and incorporation certificates.
What is an unsecured business loan?
An unsecured loan means you don’t have to attach any collateral. More and more funders are offering unsecured business loans.
Some banks will waive the need for collateral if you have a purchase order. And most fintechs lenders don’t require security.
How hard is it to get a business loan?
Your chances of getting approved depend on the lender you choose. Funders will assess the health of your business, and the amount of financing you need.
Lulalend’s credit team added that your personal financial situation will also impact your business loan application. If you are overly indebted, you might need to repay some of that debt before you can apply for a business loan.
To increase the likelihood of getting approved, take the time to research lenders.