Getting a Loan for Your Startup

Want to own your own business? Many people do, but a large majority of businesses don’t survive past the first year. The reason for this is one word: money.

Businesses are not cheap to run. You have operating expenses and overhead to consider, such as payroll, taxes, insurance, and more. Your business could easily be spitting out thousands of dollars a month. If you’re not earning enough revenue to cover these costs, you will quickly end up in debt. It can be hard to recover without a financial plan in place.

Many companies get help from crowdfunding, investors, and family and friends. If these options aren’t available to you, your next best option may be to get a business loan.

However, getting approved for small business financing can be a challenge. This is especially true if your business is new and you don’t have a good track record of generating revenue. In 2022, only 32% of businesses with less than $100,000 in annual revenue were approved for financing. This is a 50% decrease from 2019.

Getting approved may seem like a daunting task, but it can be done. Here are some ways to improve your chances.

Check Your Credit Score

Your credit score is a major factor that lenders use to decide whether to approve you for a business loan. They want to see your payment history and how much debt you are taking on. A higher score means a higher chance of approval as well as better interest rates and payment terms.

You can check your credit report via Equifax, Experian or TransUnion. You can get a free credit report from annualcreditreport.com.

Increase Your Revenue

Increasing your business revenue is a good way to expand your loan options, as lenders will feel more confident about repayment. A steady stream of revenue is a good sign. For the best rates and terms, you should aim for $250,000 or more in annual revenue. If your revenue is less, expect to pay higher rates and additional fees or charges.

Be Patient

Many lenders require companies to be in business for at least two years before approving them for a loan. If you’re still a newbie, there’s not much you can do about that. There are some lenders that will work with newer startups, but they are few and far between. You can do some research and look or just be patient and wait it out.

 Learn More About Business Startups

Starting a business can be an exciting venture, but it takes a lot of money. You’ll need to take note of all the various ways you can secure funding.

Want to start a business? It’s important to work with an experienced business lawyer to ensure the process goes smoothly. An Orlando business startups lawyer B.F. Godfrey from Godfrey Legal can help. His in-depth knowledge of both the legal and business worlds can help startups avoid costly mistakes when forming their businesses. Schedule a consultation today by filling out the online form or calling (407) 890-0023.

Source:

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