Do I Qualify for a Business Loan? 6 Questions to Ask

Writing down questions on business loans

There are 28 million small businesses in the United States alone. Many of these businesses will require a loan at some point, be it to get started, purchase equipment, or to help keep their doors open. Whether it is a brick and mortar business or completely online, it does not matter. Almost every successful business has taken out some sort of business loan for various reasons. Regardless of why you might need a business loan at the moment, there are six questions you should ask yourself before starting the loan process to increase your chances of being approved, and find out if you qualify for a business loan.

Best Business loans

Here are some questions to ask when considering a business loan

1. What is My Credit Score?

A credit score is a number that is given to someone based on their past credit history. If your credit score is 670 or above, then this is considered a good credit score and you will be more likely to be approved for a business loan. If it is below 670, there probably is a reason for it. You may have a poor credit score because you are occasionally late on payments, or perhaps you have a high balance on one of your credit cards. It’s generally good to have an idea of your credit score before you fill out an application for a business loan. And if your credit score is low, there are certain things you can do to build it back up. It may take a bit of time, but approaching a bank or other financial institution with a good credit score will be able to give you some leverage when asking for that business loan.

2. What Type of Business Loan Do I Need?

There are numerous kinds of business loans so knowing which one you want can simplify the process. Listed below are some of the more common loans that many business owners will be seeking.

Line-of-Credit Loan: You can use this loan for purchasing inventory, operating costs, working capital, or a variety of other reasons. However, you can’t use it to purchase equipment, construction on your store, or anything like that. It is a short term loan that is meant to be paid back quickly. Because of this, the interest rate is usually lower. A constant credit line is something that most businesses can use.

Installment Loan: Probably the most common type of loan, an installment loan is one where you receive the full amount from the bank or other financial institution and in return you make monthly payments to pay off both the principal and the interest. The payments may last anywhere from a few years to ten. It all depends on how large of a loan you need and the monthly payment you can make each month.

Personal Loan: A personal loan is made to individuals, but you can still attain one to help out your business. You might have received personal loans in the past at various times for purchasing a car and other similar items. For a business, you could use the loan for your business but the loan would still be under your name personally.

Some recommended business loan solutions:

LendingTree is a respectable company that can get you that personal loan you want. However, only use them if you are serious about acquiring a loan quickly. Once you fill out their application, you will be contacted by numerous lenders wanting your business. Being able to play them off of one another so you can get the best rates would be ideal.

LendingClub is another online company that can assist you in finding a personal loan. They can offer personal loans up to $40,000. LendingClub will offer you good rates as well if your credit score is on point. It only takes minutes to fill