What Are the Requirements for Small Business Loans?
If you can qualify for a small business loan, your company has access to one of the best sources of low-interest capital. Loans that are backed by the Small Business Administration are friendly for owners, offering amazing terms that give you up to 25 years for repayment. Whether you need to buy equipment, upgrade your office space or build a new location for your company, SBA loans should be at the top of your wishlist. There’s just one problem: Small business loans can be tricky to qualify for.
What Do You Need to Qualify for Small Business Loans?
A common mistake is to start thinking about SBA loans when you have an urgent need. These loans take time, so they’re not a great fit for rushing things. Instead, you should plan, visualize the goals you want to reach for your business, do your homework, and then apply for a small business loan to reach your objectives. Here are some of the things you need if you want to qualify.
Time in Business
The SBA only approves loans for businesses with at least two years of operating. In reality, to build up the revenue and credit score you need to qualify, you may need more than two years anyway.
Revenue and Cash Flow
You also need to show that you have more than enough funds to make the payment every month. Your annual revenue and monthly revenue need to show stability. This contributes to healthy cash flow.
A Good Credit History
Even though the SBA wants to help small businesses succeed, SBA loans still have some pretty strict credit score requirements. The idea is that you should work hard to have a stable business. You don’t need perfect credit, though. Mainly, you should focus on paying your bills on time, building a good relationship with suppliers, and using business credit wisely.
In other words, always prioritize paying off suppliers or lenders with your working capital, even if it means not buying something nice for your office for a few months. To give you an idea of the type of credit rating you’re looking for, keep in mind that the FICO score ranges from 300 to 850. To qualify for small business loans, you generally need a score of at least 600–650.
You can check out your credit score for free once a year. Take advantage of the opportunity to see how you’re doing from the very beginning.
Seek Expert Assistance
You can find a variety of SBA loan types here at JT Commercial Capital. Our small business loan products are designed to cater to the needs of new businesses. We know how to get your loan processed quickly so you can be on your way.