Ins and Outs of Small Business Loans

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  • Delancey Street is a premier small business lender, based out of NYC, that has helped broker 100's of millions in business loans. They are a pro, at making sure you get all of your financing needs satisfied.

    • Over $200 million in funding secured
    • Can handle low risk credit
    • Handles all industries
    • Handles high risk and low risk loans

Delancey Street is a premier small business lender, based out of NYC, that has helped broker 100's of millions in business loans. They are a pro, at making sure you get all of your financing needs satisfied.

  • Over $200 million in funding secured
  • Can handle low risk credit
  • Handles all industries
  • Handles high risk and low risk loans
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Tips for Successfully Applying for a Small Business Loan

Small businesses require adequate funding to help them establish their brand and, ultimately, succeed. The process of applying for a small business loan may seem daunting for new business owners, but taking the time to prepare adequately can make it much more manageable. Being prepared, knowing what is expected of you, and having complete records will make it easier for lenders to have confidence in your business. In this article, we will discuss various ideas on how you can prepare effectively before applying for funding, and what to expect during the application process.

Step One: Know What You Need

Before walking into any lender’s office, it is important that you understand your small business’s financial needs completely. This includes collecting all information about your existing debt and income, knowing precisely what you need, and coming across as confidently as possible to secure the right amount of funding. Keep in mind that lenders aim to invest in businesses with a high chance of success since they often work with such businesses for quite some time. Therefore, ensure that you are using loans effectively only for necessary expenses, like expanding your company or covering payroll. Similarly, do not shy away from asking your lender to provide you with favorable terms and low-interest rates for your loan. This will minimize your repayment costs while helping you maintain a positive cash flow that can support your operations’ long-term growth.

Research Your Credit Score

Remember, credit is king in the small business world. All lenders usually check credit histories before making lending decisions. Hence before considering borrowing, take some time to learn about your credit score, checking for any errors that could lead to rejections. If you realize that you have a lower score than expected, try explaining any challenges you may have faced and showcase stellar records of successful operations since then. It’s also crucial to understand that strong personal credit scores don’t translate to excellent business credit scores. Therefore, you should aim to establish credit solely for your enterprise’s operations, such as applying for easily manageable business credit cards and filing company taxes on time. You will have a greater chance of approval and receive the best possible repayment conditions and interest rates.

Know Common Credit Score Mistakes

Frequent credit score mistakes that could impact your chances of getting a small business loan include making late bill payments or not paying off your credit card balances every month. Additionally, not understanding how much credit you have to manage monthly (credit utilization) can impact negatively. As a rule of thumb, always try to stay under 10% of available credit each billing cycle, if possible. Suppose you discover that you have low credit ratings. In that case, it is best to keep improving your financial position before submitting a loan application. Being transparent about existing issues with any lender showing progress positively affects your background history; lenders are favourably disposed towards clients with recent history of steadily improving their credit scores.

Come in with a Budget

Lenders are more confident when small business owners come to them with a well-prepared budget. Thus, make sure you craft a budget that outlines exactly why you need the loan, what you will do with it, and how you plan on repayments. Including slightly inflated numbers helps minimize any discrepancies. If you need funds to buy essential equipment or establish brick-and-mortar stores, ensure that you have official receipts or quotes indicating the total cost, including from which vendors to avoid appearing disorganized. Furthermore, take the time to illustrate how these purchases would affect your business’s revenue generation and success rate since this can help lenders better understand the loan’s importance.

Have Your Documents Ready

Organize yourself properly to gather all critical financial documents covering the past year before visiting any banks or other lending institutions. These documents should include essential tax forms, such as the profit and loss statement, balance sheet, and cash flow statement. Be sure to store these documents in a well-organized binder or folder since displaying them in disarray can harm your credibility with any possible lender. Additionally, consider building a marketing and public relations section that showcases how your company is growing and viewed in your industry’s marketplace. With your financial reports organized and up-to-date, you’ll be able to explain precisely how you are managing your income and expenditure streams.

Anticipate the Questions

Lenders like to ask a lot of questions about the businesses they will fund. Therefore, be fully prepared for any potential inquiries they may pose. For example, if you experienced higher than average costs in a single month due to unforeseen expenses, anticipate an inquiry in this area. If your business has yet to turn a profit, have a convincing explanation as to why it operates at a loss and confidently demonstrate how the loan’s use will bring profitability. Be mindful that complete transparency and honesty help lenders build trust in you as a borrower.

Shopping Around for Rates and Terms

Selecting the right lender for borrowing might require having conversations with different banks with small-business lending programs. This will help you understand better what each institution is offering in terms of interest rates, loan requirements, repayment conditions, and other similar factors. Ultimately, every lender differs from the other, so weigh each option carefully before deciding on one that meets your needs and budget.

The Offer

After submitting your loan application, some lenders may grant you an offer. Before accepting any loans, maintain a clear understanding regarding the loan’s details. In particular, pay attention to the Annual Percentage Rate (APR), which demonstrates the total amount including any service charges, interest incurred, and fees you will need to cover. Also, make sure you discuss and carefully research any additional costs associated with borrowing, such as closing fees or origination fees charged by the lending institution. It is wise only to take loans that support your business decision-making while saving costs where possible.

Table of Small Business Loans and their Interest Rates

Displayed below are some small business loan options available to entrepreneurs, along with current interest rates as of 2021.

Type of Loan Interest Rate (%)
Bank loans from 2%
Merchant cash advances 9%
Term loans 7-99%
Credit cards 12-29%
SBA-guaranteed loans 5-10%
Equipment financing 4-40%

What to Consider When Choosing a Small Business Loan

The table above shows different loan types that are just a few available to small businesses. However, it is essential to make an informed decision before choosing a lender that will be your partner throughout your business life cycle. The following are factors to consider when selecting a lender:

The Required Amount of Funding:

Different lenders have varying minimum and maximum loan amounts. Some might automatically decline any loan requests below $25,000, while others may provide a smaller sum based on the borrower’s credit score. Determine your specific funding amount required and shop around for lenders whose restrictions match your requirements.

Loan Terms:

Loan terms are crucial, as these impact how much you pay back and over what period. Loan terms differ across different lending institutions. Some lenders provide instalment payment options, while others might require monthly payments.

Interest Rates:

Interest rates are an essential component when choosing a loan. Rates typically range between 2% to 99%, depending on numerous factors like credit score, borrowed amount, and repayment period.


Different lenders have varying requirements that businesses need to meet before qualifying for a loan. These may include a specified minimum credit score and being in business for a certain number of years.

In conclusion, while applying for funds to fuel your small business’s growth may seem daunting initially, the above tips can help simplify the process. Know precisely what you need for funding ahead of time, keep all financial documents ready and build a budget that outlines precisely how you will use and repay it. In addition, anticipate lender inquiries, shop around for the best rates, and always be clear about expenses involved in obtaining funding from any lender. With this knowledge, you’ll be well on your way to securing small business loans for your company’s growth and continued success.

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