The small business lending industry is going against all the odds and growing stronger as more and more willing lending companies are surfacing. And for retailers, this also means accessing micro-business loans is easier.
In fact, small to medium business lending escalated to an all-time high in May, as per the figures by PayNet, a top small business fund provider, and analyst. The company tracks the number of micro-loans issued over the last 30 days based on data from the leading lenders in its database.
In the meantime, lenders are approving loan requests at rates never recorded before. Big banks ($10 billion+ in assets) accepted 26% of the loan requests they made in June 2018, as reported by Biz2Credit Small Business Lending Index. Acceptance rates for June went up two-tenths of a percent from the figures in May. Furthermore, regional and community lenders accepted 49.6% of their June funding requests going up two-tenths from the figure recorded in May. This figure was the highest for small banks as from April 2015.
“Conditions are unusually favorable for businesses and their lenders now,” said William Phelan, the President of PayNet, Inc. “The blend of record-high demand for credit and low credit risk for businesses shows commercial lenders will enjoy more profit, more so those with systems that can help cut costs.
Well, we know that getting funds is no longer a daunting task. But how do we prepare in advance for these loans? Here is a list of documents to have ready:
- Business Plan – Prepare a plan that in a few words describes your company, the background of the founding partners, competitive landscape, your investment as the owner, and realistic financial projections. Lastly, explain how the funding will help your business reach its goals.
- Business Financial Statements – If you want a micro-business loan, be ready to share your financial information, which may include income statements, balance sheets, and company tax returns.
- Personal Financial Statements – Most lenders require financial statements for people with 20% or more stakes in the company consisting of two to three years of tax returns.
- Loan Application Form – fill in all blank spaces in your loan application form. Incomplete applications are a major reason for rejection.
- Collateral – Put together a description of the collateral that will be pledged to back the loan.
Apart from the above, lenders may also ask you to include a lease, franchise agreement, articles of incorporation, operating agreements, and any other relevant licenses to run the firm. Some high risk business loans also have different special requirements depend on where you seek funding.
Author Bio: As an account executive, Michael Hollis has funded millions by using alternative funding solutions. His experience and extensive knowledge of the industry has made him a high-risk business loans expert at First American Merchant.