What’s Your Actual Chance of Getting a Small Business Loan?
Small business loans are often the foundation to a thriving successful business—whether you need startup funds, more cashflow, or just need to make ends meet. While many small business owners apply for loans each year, a large percentage won’t be approved for the funds they need. Business Loans Direct has broken down the loan application process to help you determine your chances of actually getting a small business loan.
Years in Operation
According to the Small Business Association, only 50 percent of businesses survive their first five years in operation. Lenders understand that the longer a company has been in business, the more likely they are to succeed. The amount of time your business has been in operation is a huge determining factor when applying for a small business loan.
Lenders consider your track record for success related to the amount of revenue your business generates. The more revenue you bring in, the more likely you are to repay your loan. As a result, those with the highest level of revenue are more likely to be approved for a loan when compared to those with low revenue or fluctuating revenue cycles.
Your business’s credit score is viewed by lenders as an extension of the business owner. As a result, most lenders won’t approve loan applications if the business has a minimum FICO score of 700. A higher FICO score proves to lenders that you’re a responsible borrower.
Lenders consider a business’s debt ratio when determining whether or not to lend money. This involved more than just credit card debt volume and existing debt, but also includes past bankruptcies. Generally, lenders want to see a credit card volume of at least $3,000-$4,500, but the debt associated with those cards should be very low.
Getting approved for a small business loan is a monumental task with strict requirements. Too often, business owners simply don’t meet the qualifications. Thankfully, Business Loans Direct works with small business owners despite these factors to get businesses the funds they need quickly and easily. Contact Business Loans Direct today to learn more.