Are You Prepared for Getting a Fast Small Business Loan Right Now?
No matter how small your business may be, there is always the risk of something going terribly wrong. When this happens, you have to be ready to put out the fire, which usually means spending money. This is not always easy though, as you struggle with collecting payments, paying your overhead costs and making sure that you are able to keep up with demand. Getting a fast small business loan will help with the unexpected and ensure that your business is not affected by unforeseen events and emergencies.
Why is Getting a Fast Small Business Loan Important?
Getting a fast small business loan will not only cover your normal expenses, it could be critical in the event of an emergency. Small business owners are not always prepared when a piece of necessary production equipment breaks down, or the air conditioner in the store stops working. A fast small business loan can cover the cost of a repair, or even help you with purchasing new and updated machinery.
Another common scenario is the need to fulfill a large order or buy stock for the upcoming season, but not having the capital needed to make your purchases. This is where the adage “you need money to make money” is most evident. You can have thousands of dollars worth of orders in front of you, but without any working capital to buy the materials you won’t ever be able to fill them. Or the holidays may be around the corner, but a lack of funds is holding you back from getting prepared for them. This is where getting a fast small business loan can really come in handy by ensuring that you don’t lose any business simply because you don’t have the money needed to keep up with demand.
Taking Steps To Ensure Getting a Fast Small Business Loan When You Need It
By planning ahead, you can make sure that when the occasion does arise where getting a fast small business loan is vital to your success, you will have no trouble obtaining one. Prepare for the unexpected by following these 7 steps:
• Update Your Financial Records – Make sure that your business and personal financial records are always up to date. Lenders will want to see that you and your company are a good financial risk, which you can show quickly if you already have the documentation prepared and organized. With this information readily available you will only need to create a financial summary of your business showing how you will be able to repay any loan along with the interest.
• Have 5 Years’ Worth of Tax Records Organized – Some quick loan lenders may want to see your personal tax returns for the last 3 to 5 years and as many business returns as you have filed up to five years prior. Be prepared to answer questions if there are years where your business showed little growth or profits. Alternative lenders though will not require this for the most part unless you are receiving over $75,000.
• Keep Your Business Plan Up to Date – When you first opened your small business, you likely created a business plan that reflected your goals and plans for the future. Update this at least twice a year, or as you reach milestones in your growth. When getting a fast small business loan does become necessary, you should only need to add information about your current financial needs and how meeting them will help increase your profits. Be as detailed as possible, using real dollar amounts or percentages to represent the effect the loan will have on your business. Alternative lenders will not require any business plans. They will look mostly at recent business performance.
• Know the Value of Your Assets – If you have expensive machinery, office equipment or a large inventory that can be used as security for a loan, keep a detailed account of its value. Some fast small business loans, such as an asset loan, will require this information in order for the loan to be processed. These types of loans are a good option for a business owner, as the interest rate is generally lower since the loan is being secured. Again, alternative lenders will provide unsecured funding.
• Keep Records of Your Unpaid Accounts Receivable – Have detailed accounts of your accounts receivable, with an updated balance of what is owed to you. This can help you secure a factoring loan, where a lender gives you the value of unpaid invoices. They will then collect on those debts on your behalf, deducting the amount owed to them along with their fee for the service before sending you the balance. This method of getting a fast small business loan will give you the working capital you would have had, had your debtors paid you immediately. Alternative lenders will like to see this information especially if you are in a seasonal industry or an industry that commonly has slow A/R’s like construction.
• Know Your Personal Credit Score – Even though the loan you are considering is for your business the lender is still going to want to see your personal credit history. Keep it in good standing by making your personal payments on time, reducing your credit card debt and ensuring that you don’t have an abundance of available credit. Alternative lenders do look at your personal FICO but do not base a funding decision on your score.
• Mind Your Business Credit – If you do already have a small business loan or other debts associated with your enterprise, make sure that you are making your payments on time. Showing due diligence with your current business debts will show that you are low risk borrower to lending prospects.
Being in charge of the growth of a small business requires patience, diligence and the ability to act fast when faced with unexpected challenges. By following these 7 steps, you can take some of the pressure off when getting a fast small business loan is your only option. Every day spent getting your paperwork together while the air conditioner is on the fritz is costing your business, not only at the moment but for the future as well. By being prepared for when things do start to heat up, you will have the ability to put out the fire fast with a small business loan.
