Cash Borrowing Tips-5 Things Small Business Lenders Look For

Small business lenders normally look at a couple of things before advancing loans to entrepreneurs who are in need of extra capital to either expand their business operations or to just get them through a difficult season in business.

Once you identify that you’re in need of additional capital, then it’s up to you as an entrepreneur to come up with ingenious ways of getting the needed capital to ensure the survival of your business (the Sources Of Finance Available To A Business that we looked at a while back can come in handy) and if it happens that you opt to seek a loan from small business lenders, then there are a couple of things about them that you ought to know in regard to how they do business.

Rarely does it happen that top small business lenders just dish out money to every entrepreneur who comes along their way in the name of raising additional capital for their business.

What essentially happens is that small business lenders look at a couple of things before giving loan advancements to entrepreneurs and so knowing some of the crucial things they look for can place you a step ahead of the others.

I’ll therefore be sharing with you 5 of the main things that small business lenders look for when deciding on whether or not to give out loans.

What Small Business Lenders Look For #1: Your Money Discipline

This refers to how well you live within your level of income.

If small business lenders and other lenders realize that you live above your means, then the chances of you getting loan advancements will be significantly reduced.

You therefore need to ensure that you cut your coat according to your cloth

What Business Lenders Look For #2: Collateral

Collateral simple refers to a security pledge for the repayment of a loan e.g. if you want to get a loan of $20,000, then you need to have valuable property as collateral so that the lender can feel secure.

You therefore need to have collateral so that small business lenders and other business lending institutions can feel secured in lending you money.

What Small Business Lenders Look For #3: You Financial Track Record

Looking at financial track records is something that most if not all small business lenders do and this is because they want to know whether you’re a credible entrepreneur who can pay them back or just a “lost cause”.

You therefore need to ensure that you’ve good a good reputation of paying back your loans if you want small business lenders to advance you loans.

What Small Business Lenders Look For #4: General Money Behavior

This refers to your income and debt handling ability.

If you ever want small business lenders to lend you money, then you’ve got to prove that you’re more than capable of 1) Using your income well and 2) Repaying back your loans on time.

What Small Business Lenders Look For #5: Your Reason For Seeking A Loan

Small business lenders will always look at whether you’ve got a valid reason for seeking loan advancements. If they find that your reason isn’t genuine enough, then they’ll send you back empty handed.

You therefore need to ensure that you’ve got a good reason for seeking loan advancements e.g. don’t go seeking loan advancements from small business lenders in the name of buying a new luxury car.

My Take On The 5 Things Small Business Lenders Look For

The main thing to always keep in mind is that small business lenders basically look for “proof” that you can pay them back their money. In other words, small business lenders want to look at your track record to see whether you have the ability to pay them back their dues.

If they do find that you have the ability (or seem to have it) to pay back your creditors, then majority of small business funders will be more than happy to advance you a loan. If on the other hand they deem you as a “lost cause”, then the chances of small business lenders advancing you even a dime is next to nil.

If you do manage to get a loan from a particular small business lender, then my advice to you would be to put that money in the right place, don’t misappropriate it.

You should also take care not to go about seeking loan advancements from all the small business lenders you know or have heard of because you want more money. Remember that you’ll have to pay back all the lenders who’ve loaned you money so the more of them you have, the more you’ll need to pay back .

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