Always remember that taking out a business loan is a risk for the lending party that will be helping you. To ensure that they will not be losing money by granting you a loan, they need to minimize that risk. How do they do it? They investigate and check your qualifications. If you tick all the boxes they require, then they will grant you the loan. Let’s review the things they look at so that you’ll know your chances of getting approved.
Understandably, the lending party will be checking how good of a borrower you are. It would be irresponsible for them to lend you money without at least making sure that you can be trusted to pay what you owe. If you already have an existing business, your company’s credit report will be investigated as well. This is pretty much the top criteria that lending companies and banks will be checking.
Now that the bank or the lending company has confirmed that you are good at making payments. They need to make sure that your company is doing well enough for you to make the payments as scheduled. Usually, lenders will approve companies that make $50,000 to $150,000 in annual revenues.
Lending companies and banks minimize the risk they are taking when granting loans only to business owners whose companies have already been operating for at least one year. Part of the risk reduction process for lending parties is to ensure that the company is stable and is continuously making a profit. If a company is less than a year old, borrowers can go for a business startup loan instead.
How you plan to spend the money
It might seem unusual, but this is pretty much standard fare. Lenders will need to know what your plan is with the funds before approval. This helps them understand your business plans, and it helps convince them that you are planning to make more money. If you make a profit, then you make your payments with them.