Whether you’re just starting your business or looking to help your existing one grow, you’ll need some extra cash to jump-start that growth. There’s plenty of lending and financing options out there, one of which is a working capital lender. Here’s what you need to know before you apply.
How Long Your Business Has Been Up and Running
Lenders are often wary of giving large loans to brand-new businesses. Consider waiting a few months after starting your business to begin asking for extra capital.
Your Credit Score
Where do you stand with your existing credit? Lenders of all types will want to know how good you are at paying off debt. If your credit score has seen better days, take care of any outstanding debts and pay your bills on time to make the best first impression possible on potential lenders.
Where the Money Will Go
Have a plan for your working capital before you ask for it. Do you need to rent a storefront? Hire new employees? Update your equipment? When a working capital lender asks you how you’re going to use the money, have an answer ready for them.
Your business’s niche or industry can have some bearing on the type of loan you’ll want to seek. How quickly you need the money and how you’re going to use it both play a role. Some private startup business loans are secured, so they’ll require collateral. Others, such as business lines of credit, are quicker to attain but less secure.
The Type of Loan You Need
Do you want to apply for a business credit card or an SBA (Small Business Administration) loan? Depending on a number of factors, including your credit score and how well you’ve established your business, some loans will be easier to secure than others. Take stock of your current circumstances and choose a loan type you know you can pay off.
When your business needs more working capital in order to grow, the loan process can make or break your business’s future. Know exactly what you’re asking for when you apply for a working capital loan, and keep these five factors in mind during the process.