One of the most important things about running a business is having the resources to help you realize your objectives. And most of these resources have a financial aspect attached to it. Whether you want to buy raw materials, have some machines, or hire someone, you need finances. It is a known fact that most businesses, especially SMEs, tend to be quite limited when it comes to finances. So they are often inclined to borrow money for them to stay in business and compete.
There are several options to consider when you are looking for a business loan. With a range of providers offering loans out there, you need to make sure that you make an informed choice before committing to any business loan type. And here are some top considerations to bear in mind whenever you are shopping for a business loan.
Lending Criteria for Business Loans
Before you start shopping for a business loan, you need to understand what lenders will be looking for before approving your application. For instance, they might be interested in knowing how long your business has been in operation. Most lenders want to work a business that has been operations for a while, especially if you do not have a decent asset base.
Another essential criterion used is your turnover, which is considered the clearest indicator of your business’ health. Most lenders would want a business that can be able to pay for the loan. Most importantly, they might also have to look at your credit score – business or personal, to determine the risk involved. If your company has met these eligibility criteria, you need to start looking for a lender who promises the best terms. Here are some factors to consider when sifting through different lenders.
Security: You need to understand the concept of security when looking for business funding. You need to choose between secured and unsecured loans by evaluating the pros and cons offered by each option.
Flexibility: Most business loans have both fixed terms and monthly payments. However, if you are not so sure about your repayment ability, you might consider going for a flexible option.
Nature of your business: Finally, you need to think about the nature of your business. For instance, if you get most of your revenue from cards, it makes sense to work with a lender who offers merchant card loans.