So things are going really well for your business, huh? You might even use the cliche “business is booming” to describe how things have been going lately. While generating a considerable revenue and turning a profit are great and even necessary aspects of owning and running a successful small business, a rapidly increased sales volume can present challenges or growing pains. With constant sales orders to fill out, you might find that you need to hire more employees to compensate for the increase in demand, or even move to a larger building. Whatever your expansion ideas are, you’ll need additional capital to finance these operations.

If You Need Capital, CFG Can Help Provide It

To access said additional capital, you can turn to your cash flow and accounts receivable. However, if you’re still waiting on payments from vendors, you might also find that you have significantly less capital that is available to finance business expansions, and therefore accelerate the growth and success of your valued small business. Fortunately, small business lending companies like The Commercial Finance Group can provide you with fast capital when you need it most. Plus, our asset-based loan solutions mean that your business assets, such as your invoices, are all that’s necessary to secure collateral for your loan. It’s easy, effective, and it will help your business!

But before you get involved with the small business lending services like The Commercial Finance Group offers, it’s worth taking the time to make sure that you’re actually ready for that next step in your business. After all, searching for the right business loan usually leads to dozens of questions, if anything. To help you keep track of everything that you should look for when it comes to securing the right small business lending solution and loan, give this simple yet effective checklist a read. Let’s take a look.

Make Sure That You Know What You Need

So your small business needs more capital. That’s great, but what is that additional capital actually going toward? In order to receive this money, you’ll need to make it very clear as to what the funds will be spent on. Whether you need a brand new piece of equipment or you’re simply getting in touch with us for our cash flow solutions as you wait on payments from vendors or customers, make sure that you get specific about how much capital you’ll need before you do just about anything else.

Know How You’ll Use The Funds

Though you might very well know how this loan is going to help your business thrive and flourish, it’s up to you as the business owner to make that clear and articulate that need to your prospective lender in question. Think it through carefully – we suggest even writing it out on paper before you type it into a computer, especially because you’ll need to come back to these thoughts and notes at a later point. More often than not, a lender will be impressed and more willing to provide you with that small business loan if you prove to them that you’re a responsible borrower who has growth and small business longevity in mind as opposed to a desperate borrower that’s scrambling just to get some bills paid. Like many things in life, this point on the small business loan checklist comes down to how prepared you are and how you present yourself.

Your Loan Timeframe

Though a seemingly simple matter, this item on the checklist actually has a significant impact on where to begin your small business loan shopping. If you can’t wait more than a few weeks (or in some cases, a few months) for your funds to come through, then turning to a traditional banking institution for that much-needed loan probably is not the way to go.

Conversely, if you need your financing as fast as a matter of weeks or even days, options like short-term loans, merchant cash advances, or the invoice factoring services that we offer here at The Commercial Finance Group are all great options that conform to your timeframe. Just keep this in mind: emergency financing often proves to be more expensive in the long run, so, don’t let you relative eagerness for fast cash overshadow otherwise responsible decision-making practices.

Know Your Credit History

Looking into and securing virtually any kind of loan involves investigating your credit history, and a small business loan is no exception. In other words, you’ll want to understand exactly how your credit stacks up before you actually start the loan application process. Fortunately, you’re entitled to one free personal credit report each year.

You can typically get a quick and free credit report and retrieve it from websites like AnnualCreditReport.com, so it’s not difficult to obtain a credit report. Bear in mind that your credit score may vary among the three credit agencies that consist of Experian, TransUnion, and Equifax, and you also won’t know which score the potential lender in question will see. That being said, here’s a scale that gives you a general idea of how your credit score is ranked:

Excellent: 781-850

Good: 661-780

Fair: 601-660

Poor: 501-600

Challenged: <500

So following these credit scores, just be aware that a low credit score can disqualify your business from receiving certain small business funding and loan products from select lenders.

Additionally, if you happen to be a newer or younger business, or you plan on borrowing from an alternative lender like The Commercial Finance Group (in other words, not a traditional bank), then you typically won’t need to worry too much about your business credit. While traditional bank lenders tend to frequently refuse lending out to young and small businesses, factoring companies like us have the ability to consider other areas of your business finances like your invoices, instead of just your credit score.

Choose Your Lender And Specific Loan Product

As you’re probably well aware of, not all loans are created equal. But once you’ve reached this point, it’s time to select a small business lender and identify the exact type of loan product that will best suit your needs and the financial situation for your business. Naturally, you’ll want to work with a lender who has serviced and provided loans to similar businesses in the past and understands your financial needs. After this is considered, your selection should come down to whoever offers the best rate and payment terms.

Before you get involved and accept a loan offer, just make sure that you can comfortably afford the loan. This includes things like the monthly payments, long-term cost throughout the duration of the loan period, and any additional fees. So, you’ve found the right small business lending solution for your situation? That’s great, but before you actually apply for said loan, you’ll need to deal with some paperwork first.

Get Your Documents Together And Organized

While different lending companies require different combinations of documents in order to investigate and ultimately approve the loan in question, the type of documents listed below should be fairly comprehensive. Remember that certain documents require notarization, while other documents need to be originals as opposed to photocopies:

  • Personal and business income tax returns (past 3 years)
  • Personal and business bank statements (last 6 months)
  • Payroll records (last 6 months)
  • Business licenses (including any relevant permits, approvals, etc.)
  • Articles of incorporation (including any LLC agreements, partnership agreements, shareholders agreements, etc.)
  • Titles and leases for any business real estate of any kind
  • Evidence of accounts receivable or AR
  • Titles to any personal real estate that you could use as collateral
  • Patients, copyrights, and anything else that’s related to intellectual property

While this list of documents seems overly thorough and extensive, it’s worth being prepared, especially if you really need the capital for your small business. You’ll also need to be prepared to disclose any sort of adverse regulatory actions from the IRS or the government in general, in addition to any liens against your business property. There are a few more things that we need to touch on, and then you’ll be on your way to small business funding!

Be Ready To Talk About Your Business History

There’s no one that knows your business better than you as the business owner, right? While describing your business is not always required by certain lenders, a written overview is certainly your chance to showcase your business in the best possible light. Don’t fudge any details, obviously, but you should include your personal work experience prior to opening up your business, as well as your educational degrees (if applicable), your professional certifications, the revenue of your business, the size of your company, and the overall range of products or services that you offer. These are all important items that will make your business stand out from the crowd.

Draft A Financial Statement

Your financial statement should achieve the purpose of communicating the stability of your business, both historically and looking toward the future. In doing this, you should allow your current revenue and cash flow to speak for themselves. To strengthen your financial statement, make sure to write that your projections for the future are relatively conservative, while at the same time, you’re a reliable borrower.

Finally, Make Sure To Have A Business Plan On Hand

This your chance to really tell your lender why it is that you need this financing and the corresponding impact that it will have on your business. You can express this in both words and figures. What a great business plan will do is lay out the history of your business as we mentioned earlier, and also describe the framework for your competitive structure as well as your vision for the future, supported by numbers from your financial statement.

To reiterate, the main focus here is to be providing your lender with why this loan is a good investment for not only your business but also for their business. If you have a mentor or financial advisor for your business (as you should), try to get them to look over your business plan before you’ve submitted it off. With a strong business plan in your hand, you’re now ready to tackle that loan application and be on your way to get the business lending solutions that you need!

At The Commercial Finance Group, We’ll Help Your Way To Success

Obviously, our small business lending and invoice factoring services here at The Commercial Finance Group don’t expect you to remember all of this information. While securing an asset-based loan or another factoring loan might be overly complicated, it isn’t. Besides, our dedicated professionals are here to help you! So if you’re thinking “how to get a small business loan,” we have the answer, and our convenient Atlanta, Burbank and Los Angeles locations can work with you directly to find the right finance factoring solution for you. Contact CFG today!