If your small business has experienced a few ups and downs, don’t assume a business loan is out of the question. While some lenders will quickly turn you away, there are others who look beyond credit scores and consider other factors. If you work with the right service to find those lenders, there’s a good chance of getting the financing that you seek. Before you start looking, make sure you’ve completed these action items.
Check Your Credit Reports
How much are you assuming about your business credit score and how much is backed by fact? The only way to know for sure is to order copies of your credit reports from all three of the major bureaus.
While there are lenders who rely on all three agencies to check the financial backgrounds of loan applicants, most will only order reports from one or two. The thing is you don’t know which ones a given lender will order.
There is also the possibility that information found on one report is missing from the others. You won’t know that unless you obtain copies of all three reports and compare them closely. Doing so provides the chance to challenge incorrect or outdated information. At the very least, you can be prepared to explain questionable data if the need arises.
Develop a Plan for the Money
Lenders who offer financing to business owners with less than perfect credit often like to know how the money will be used and what sort of plan the applicant has for repaying the balance. This is true even if you are seeking a bad credit car loan to replace some of your delivery vans or invest in a new limousine for airport shuttle business. Prepare a detailed plan that shows what you plan to do with the purchase, how it will affect your revenue generation, and your strategy for including the loan payment in your operating budget. Being prepared is one more way you demonstrate that the lender should do business with your company.
Prepare an Income Statement
While your plan for the future is great, what about the here and now? Prepare an income statement that shows your average gross and net income over the past six months to a year. The goal is to show how you will still be able to repay the loan according to terms even if the generated revenue remains static.
Decide How Much You Can Set Aside for Monthly Loan Payments
Before approaching any lender about a small business loan in Canada, take a long look at your obligations versus your average gross income. Once you have paid your usual monthly business expenses, how much is left? Your goal is to identify the maximum amount you can afford to allocate toward the monthly business loan payment. In the best-case scenario, that figure will be higher than the terms lenders are willing to extend.
Once you have made a reasonable amount of preparation, find a service that can match you with the right lender. Go over the conditions of the offer carefully and make sure you can honor them without hardship. Doing so ultimately strengthens the operation and provides your company with a renewed chance for growth.