3 Steps To Speed Up Approvals for Small Business Loans
Small business loans are essential for many companies at one point or another because they let a business make investments that would otherwise be unreachable. From new equipment acquisitions or real estate purchases to working capital loans that open up new opportunities to expand your operational volume, they play many roles in a company’s growth.
Unfortunately, they can take a while to get approved, especially if you use programs like the SBA’s 504 asset purchasing loans. There are a few ways to speed them up, however.
1. Streamline Your Credit Scores
If you are a sole proprietor or member of a limited partnership, it is not just your business credit score that comes into play when you apply for loans. Usually, lenders want to see that your personal credit is also attached to the loan as a guarantee, at least for major asset purchases. Build business credit by getting credit cards for purchasing or by opening a small business credit line. Regular use of those instruments will help establish or improve a company’s score while you take care of any issues with your personal score.
2. Send a Complete List of Collateral Assets
Incomplete asset disclosures are one of the biggest reasons for delays on small business loans. The process simply can’t move forward until the complete paperwork on all the assets the loan will use as collateral is available to the lender. In the case of SBA 504 loans, that means listing everything you will buy with the loan.
Even if the asset values add up to the required collateral amount, other stipulations in the loan may require you to increase the available equity in the collateral pool, especially for large loans with long repayment terms. Check with each lender about the requirements for individual loan programs.
3. Provide Realistic and Detailed Financial Projections
One pitfall of some small business loan applications is a tendency to be either too optimistic or too pessimistic with financial projections. Lenders want to see that you can handle the loan, so being self-deprecating does not help. Neither does a rosy assessment that fails to provide proof. Make sure that the projections and financial disclosures together demonstrate the backbone of your income, whether it is consistent demand, long-term delivery contracts, or another model entirely.
With the right approach, you can take a lot of the wait time out of applications for small business loans. That makes it easier to move forward with your company’s growth.