How to Qualify for a Small Business Loan in New York City
Many small business owners in New York City face the same challenge when it comes to securing financing: they don't know where to begin. The process of qualifying for a small business loan can be daunting, but it doesn't have to be. With a little research and preparation, you can increase your chances of being approved for the loan you need.
Small business loans are an essential source of funding for many small businesses in New York City. However, finding the right lender can be a challenge, there are so many lenders advertising to you from the billboards to your social channels.
You may be tempted to contact the first one that appeals to you and it always sounds easy, they may have some really catchy advertising, but you want to be careful. You can end up being talked into something that is going to be hard to pay and hard to get out of. It's important to shop around and compare offers from multiple lenders. Don't just accept the first loan offer you receive.
Do Your Homework and Research The Various Lenders In Your Area
It's important to understand the different types of lenders. There are banks, credit unions, and online lenders. Each type of lender has its own strengths and weaknesses. It's important to do your research and choose the type of lender that's right for your small business. Make sure to have a number of questions to ask before you actually contact any lender.
Compare interest rates and terms from multiple lenders. It's important to get the best deal possible on your small business loan. Otherwise, you'll end up paying more in interest and fees over the life of the loan.
Have a solid plan for how you'll use the loan proceeds. Lenders will want to see that you have a clear purpose for the loan and that you're not taking on too much debt. Be prepared to answer questions about your business plans and financial projections.
Three Steps To Consider When You Are Starting To Develop Your Plan
Step 1: Know Your Credit Score
One of the first things lenders will look at when you apply for a small business loan is your credit score. This number is a good indicator of your ability to repay debt, and the higher your score, the better. If you don't know your credit score, you can request a free credit report from one of the three major credit bureaus. You may have a low credit score that may have the lenders questioning your credit abilities, always have a back-up plan to satisfy the lenders so that you get the money that you need for your business. The Better The Credit, The Better The Chances.
You may not want to consider asking anyone in your family for help, but you should at least check around to see who has the ability to help you. Your father, grandmother, your aunt or your best friend. You don’t know who has really good credit and it may surprise you that they will help you anyway they can. It may even surprise you that your grandmother has the best credit around, because she loves you so much, she wouldn’t even question your need for money for your business, and offer her a percentage or return on her investment.
Step 2: Have a Strong Business Plan
Lenders will also want to see a well-thought-out business plan that includes financial projections for your business. This document should outline your business goals and how you plan to achieve them. If you're not sure where to start, there are plenty of resources available online, including templates and sample business plans.
If you already have a Business Plan that you initially used when you started your business, it’s time to dust it off and update it now. Whether you use a business consultant or you plan to do it yourself, you want to show that you’ve been hitting your projections.
Most lenders will want to see your Financial Statements for the last 3 years, and these would be audited or based on your tax returns, make sure to have them available. Most lenders will understand that you have suffered losses during the pandemic. You may even want to adjust your business plan as a COVID Recovery Plan, this is where most businesses are right now.
You want to show how this cash injection will help you right now and make sure it’s clear where the money is going to be used, it might be for an expansion, updating your stock, renovations, equipment replacement, but show how this cash will improve your business. Most businesses are evaluating their marketing strategies, you may want to include this as well as most businesses are trying to get their old customers back.
Step 3: Choose the Right Lender
Not all lenders are created equal, so it's important to choose one that's a good fit for your needs. Some lenders specialise in certain industries or types of businesses, so make sure you're aware of any sector-specific requirements before you apply. You should also compare interest rates, fees, and repayment terms to find the best deal.
Get familiar with the terminology that lenders are using right now, it’s a little different now, because a lot of lenders are offering various services such as Merchant Cash Advances that you repay based on your daily or weekly sales.
Following these steps will help you increase your chances of being approved for a Small Business Loan In New York City. Just remember to take your time, do your research, and choose the right lender for your needs. Good luck!