JThe need for cash is likely when running or starting your own business. Businesses large and small use borrowed capital to help their businesses run more smoothly. For a new business owner, the process of obtaining a business loan can seem overwhelming. That’s when you need help! Lynn Wofford is the Brand Branch Manager at the Heritage Bank branch in downtown Olympia. Wofford, who has worked in community banking for more than 40 years, knows a thing or two about how business loans work.
With the help of banking professionals, getting approved for a loan doesn’t have to seem daunting. In fact, Wofford offers four easy steps to help you get the business loan you need.
Step 1: Consider your eligibility
When looking for a business loan, you need to consider your eligibility. Banks always look at historical data to decide if you qualify for their loan.
A bank often likes to see:
Your time in business. Traditional lenders will often want to make sure you’ve been in business for at least two years. Although some lenders will give you a loan after a year, these are less common.
Your personal credit score. Your personal credit score plays a key role in your ability to secure a business loan. This is especially true for new businesses without a ton of historical data to back up their loan application.
Credit scores are important because before offering you a loan, lenders need to be convinced that you are going to be trustworthy with your payments based on your past payments. The higher your personal credit score, the more options you will have for your business loan.
Your cash. Lenders need to know that you have the right amount of money to pay your loan repayments. Your cash flow is a good indicator of whether or not you will be able to sustain payments to the lender.
Collateral. Traditional lenders often ask for collateral when granting a business loan. If you have tangible assets to offer as collateral, such as real estate or equipment, you are more likely to get a business loan.
Step 2: Decide what type of loan you need
There are tons of different types of loans out there, which can easily become overwhelming. Although a lender can help you determine the type of loan that’s best for you, it’s important to do your own research beforehand.
Heritage Bank offers many types of loans needed to cover the needs of a businessman. These include commercial mortgages, term loans, lines of credit, equipment financing, and more.
The Heritage Business Express loan is a perfect example of a type of loan easily accessible to new or start-up businesses. The Heritage Business Express loan is designed for small cash flow needs, but offers loan options up to $750,000. The convenient short-term application process helps businesses secure the capital they need to succeed.
Step 3: Prepare with the necessary information and documents
The best way to streamline the process of getting a loan is to be organized, keep good records, and come prepared with all the information and documents needed to secure your loan.
Here are some common things you’ll need when meeting with a lender:
- A personal financial statement
- Two or three years of business and personal income tax returns
- Intersessional financial documents, including a loss of profit and a balance sheet to get an idea of where you are since the start of the year
- Professional and personal credit ratings
- Legal contracts
- Licenses and registrations
Step 4: Complete your exam application
Completing loan applications can take time. But as long as you have the documentation listed in the last step, it should be pretty straightforward.
Once your application is completed and submitted, expect to wait between 24 hours and several weeks to receive your decision, depending on the type of loan you are applying for.
Fortunately, with experienced and dedicated people like Wofford in the banking industry, applying for and receiving business loans can be done with little or no stress. She can walk you through each of these steps, making sure you’re doing your best, to give you your best shot at getting approved.
Learn more about the different types of business loans from Heritage Bank. Once you’re ready to apply, you can visit a local branch, book an appointment online, or call 800.455.6126.