To determine if you qualify for a small business loan, we consider several key factors to assess your business’s financial health, creditworthiness, and ability to repay the loan. Here’s an overview of the main criteria we typically evaluate:
1. Business and Personal Credit Score
• We review both your business and personal credit scores. A strong credit history can demonstrate reliability and good financial habits, which improves your chances of approval. Personal credit may be considered, especially for newer businesses without an established credit record.
2. Business Financials
• Revenue and Cash Flow: We look at your business’s monthly or annual revenue to gauge if it generates enough cash flow to cover loan payments. Consistent revenue can indicate stability.
• Profitability: While not always a requirement, profitability (or a clear path to it) can improve your chances, as it shows your business can sustain operations and repay debts.
3. Time in Business
• Many lenders prefer businesses that have been operating for at least a year or two. Established businesses are viewed as lower-risk, but we also offer options for newer businesses with strong potential.
4. Debt-to-Income Ratio
• We assess your current debt obligations compared to your income to understand your ability to handle additional debt. A lower debt-to-income ratio generally strengthens your application.
5. Collateral and Assets
• Some loans may require collateral, such as equipment or real estate, which acts as security for the loan. This can help reduce risk and make approval easier, especially for larger loans.
6. Purpose of the Loan
• We look at how you plan to use the loan, whether for expanding operations, purchasing inventory, or managing seasonal expenses. A clear purpose helps us understand the potential return on investment.
7. Industry and Economic Factors
• Finally, we may consider the nature of your industry and current economic conditions, as certain industries may be riskier depending on market trends.
By examining these factors, we get a full picture of your business’s financial standing and growth potential. Our goal is to work with you to find a loan solution that fits your needs and helps you succeed.
