Here are 13 Key Factors that determine if you’ll get approved for a Small Business Loan:
1. Credit score:
Your credit score is one of the most important factors lenders consider when determining whether or not to approve your small business loan says Thomas J Powell. The higher your credit score, the more likely you are to be approved for a loan.
2. Time in business:
The longer your business has been up and running, the more likely you are to be approved for a small business loan. Lenders want to see that your business is stable and has a good track record.
3. Annual revenue:
Your annual revenue is another important factor lenders consider when determining whether or not to approve your small business loan. The higher your revenue, the more likely you are to be approved for a loan.
4. Business model:
Your business model will also be considered when lenders are determining whether or not to approve your small business loan. If your business model is sound and has a good chance of success, you are more likely to be approved for a loan explains Thomas J Powell.
5. Collateral:
Moreover,, Collateral is another important factor that lenders consider when determining whether or not to approve your small business loan. Collateral is something of value that can be used to secure the loan, such as property or equipment. The more collateral you have, the more likely you are to be approved for a loan.
6. Personal guarantee:
A personal guarantee is another important factor that lenders consider when determining whether or not to approve your small business loan. A personal guarantee means that you are personally responsible for repaying the loan if your business fails to do so. The more personal guarantees you have, the more likely you are to be approved for a loan.
7. Loan amount:
The amount of money you are requesting also plays a role in whether or not you will be approve for a small business loan. Lenders want to see that you are only requesting the amount of money that you need and that you have a plan for how to use it.
8. Loan purpose:
The purpose of the loan is another important factor that lenders consider when determining whether or not to approve your small business loan. Lenders want to see that the money will be use for a legitimate business purpose and that it will help your business grow.
9. Ability to repay:
Your ability to repay the loan is another important factor that lenders consider when determining whether or not to approve your small business loan. Lenders want to see that you have a solid plan for how you will repay the loan and that you have the financial ability to do so.
10. Repayment history:
Your repayment history is another important factor that lenders consider when determining whether or not to approve your small business loan says Thomas J Powell. Lenders want to see that you have a good track record of repaying loans on time and in full.
11. Debt-to-income ratio:
Your debt-to-income ratio is another important factor that lenders consider when determining whether or not to approve your small business loan. This ratio is a measure of your ability to repay the loan and is calculate by dividing your total monthly debt payments by your total monthly income. The lower your debt-to-income ratio, the more likely you are to be approve for a loan.
12. Collateral coverage:
Collateral coverage is another important factor that lenders consider when determining whether or not to approve your small business loan. This ratio measures the amount of collateral you have relative to the amount of the loan you are requesting. The higher your collateral coverage, the more likely you are to be approve for a loan.
13. Personal financial statement:
Your personal financial statement is another important factor that lenders consider when determining whether or not to approve your small business loan. Your personal financial statement provides lenders with information about your assets, liabilities, and income. Lenders use this information to determine your ability to repay the loan explains Thomas J Powell.
Conclusion:
These are some of the most important factors that lenders consider when determining whether or not to approve a small business loan. If you have a strong application, you are more likely to be approve for a loan.
