How Do I Get a Small Business Loan in North Carolina?
Starting a new business in the Fayetteville-Cumberland region? Or are you eager to begin a business expansion?
Small business loans allow small startups and established businesses to acquire the funding they need to achieve their business goals – without losing equity or stake in their company.
In this blog, we discuss…
6 steps you should take BEFORE applying for a small business loan
The small business loan application process
And what you need to know about securing your loan
Before you get a small business loan…
First things first – there are several steps you need to take before you can secure a loan for your small business:
1. Figure out what lenders are looking for.
When evaluating your application, there are several things lenders want to see. This includes a high credit score, a consistent financial track record, extensive industry experience, and a well-written business plan.
2. Determine the loan amount needed.
Now, take a look at your own financial situation. What funds do you already have available? And how much funding will you need from a lender to move launch your business plan.
3. Optimize your credit score.
The better your credit score, the more financing options you’ll have to choose from. It’s best to take the necessary measures to improve your credit score BEFORE you start the loan application process. This could take some time. Try to be patient and use the waiting period to continue developing your business plan.
How can you raise your credit score?
Start by paying your bills on time – or even ahead of time! If you’ve developed a habit of making payments too late, try automating your payments or rethinking your payment process.
It’s also a good idea to apply for a new business credit card or business line of credit. Use the card for business expenses like your utility bill or restocking inventory. However, in order for this credit responsibility to pay off, you should make sure your business credit company reports to commercial credit bureaus.
PRO TIP: Another priority should be increasing your credit utilization ratio. You can do this by scheduling regular monthly payments, zeroing out your balance every time you make a payment, and raising your credit limit.
4. Gather and organize necessary documents.
The specific information and documentation required varies from lender to lender. However, you can expect to provide tax returns, bank account statements, profit-and-loss statements, and other corporate documents.
5. Prepare or update your business plan.
When you apply for a business loan, it’s crucial that you present lenders with a well-written business plan. It should provide the assurance lenders need to trust that you are a dependable business owner and a good investment.
Already have a business plan? Now’s the time to review and update!
Want help writing a winning business plan? Check out our top 5 business plan recommendations.
6. Find a reputable lender.
Consider all of the different financing options at your disposal – from Small Business Association (SBA) loans to conventional loans to alternative non-bank loans.
Do plenty of lender research. This is not a process you’ll want to rush. Ask other local business owners if they have any lender recommendations.
Need a good way to get connected with other business owners in the Fayetteville-Cumberland area? Make sure you attend our upcoming networking and business development events!
Choose several lenders and request a loan offer. Compare each lender’s loan terms, interest rates, fees, repayment schedules, and collateral requirements.
Not sure which loan offer is best? Seek professional advice from our industry experts.
Applying for a small business loan
After doing your research, gathering all the necessary information and documents, and choosing your lender, you are ready to apply!
Depending on the lender, you will need to fill out an application online or in-person. Completing the application can take anywhere from a few minutes to several days or weeks. If you come across any questions throughout the application process, reach out to your lender for clarification.
Securing your small business loan
The application approval process depends entirely on the lender you choose. The approval processes for SBA and conventional loans are notoriously longer and more complex.
In order to move the loan process along, you should:
Respond promptly to lender questions and requests.
Be prepared with all the information and documents your lender might require.
Once your lender provides a loan agreement, make sure you spend plenty of time reviewing it. Don’t be afraid to ask questions or clarify certain terms before signing. The last thing you want is to sign a loan contract that will make it harder for your business to hit the ground running.
After signing, the final step is to establish your repayment plan. Take a deep look at your budget and come up with a detailed strategy to manage your finances for the duration of your loan.
PRO TIP: It’s important that you maintain a positive relationship with your lender in case you decide to explore any refinancing options down the road.
Fayetteville-Cumberland Regional Entrepreneur & Business HUB – Small Business Resources
Are you launching or expanding a small business in one of the following counties?
The team here at Fayetteville-Cumberland Regional Entrepreneur & Business HUB wants to help you get started!
We offer business development support, regular networking and business growth workshops, financial assistance, and more – basically everything you need to set your small local business up for success.