If you’re like most small business owners, money is your primary concern- especially when you’re just getting started. There are so many costs in the beginning, including:

• Licensing/permits 

• Marketing 

• Equipment 

• Space 

• Inventory  

Of course, these are just the tip of the iceberg. There are so many more to consider and even if you have the most amazing idea for a business, you may not qualify for the funding you need.

Traditional banks almost never extend loans to start-ups but they will extend them to an existing business. Alternative lenders, such as those you’d find online are typically more lenient with their requirements.

No matter what type of funding you decide you want to pursue, there are certain steps that are pretty standard when it comes to securing the funding. They are as follows:

4 Steps to Secure Funding for Your Business

Below, we’ll go over the 4 steps you must follow to secure funding for your small business- whether you’re just getting started or you’re already established.

Write a Business Plan

The first step is to write or update your business plan. There are no lenders that will even consider approving your request without it. They want to know that you will be able to repay the funds within the terms prescribed. The details will vary, but the standard business plan outline is as follows:

• Executive Summary 

• Business Overview 

• Market 

• Industry Trends 

• Competition 

• Marketing/Sales Plan 

• SWOT Analysis 

• Operations 

• Management/Personnel 

• Exit Strategy 

• Financial Projections  

Consider Your Credit History

If your business is under 3 years old or just getting started, the lender will likely examine your personal credit history/score. Before you apply, take the time to request a copy from all three agencies to clear up any issues. If you need to, write a letter to each agency detailing the errors and file disputes if you need.

Most lenders do prefer a 700+ score, but you still may be approved with a lower score because they do often take other factors into consideration: your ability to repay the loan, collateral to secure the loan, your personal investment into the business, and the current economic climate.

Visit a SCORE or SBDC Office

If your area has a SCORE or SBDC office, stop in to get some advice from experienced execs. SCORE is also known as Counselors to America’s Small Business. They are volunteer mentors with the SBA and are an invaluable resource for entrepreneurs that are just getting started. You can visit their website to sign up for local workshops, free webinars, or on-demand courses through the website. They even have an online library that can help.

The SBCD office is similar. They also offer assistance to entrepreneurs and small business owners. The SBDC is funded through the SBA and often hosted by universities and offers many resources from the SBA.

Complete Your Loan Application

Now that you’ve considered your options, it’s time to take the next step: filling out the application. Most of the time applying for a business loan takes 2 to 3 months from the time of application to the time the application is approved/denied.

The application typically asks for the basics: business name, contact info, date of incorporation, and legal structure. They may also want to know your NAICS, which stands for North American Industry Classification System.

The lender will also want to know about your products/services and what your business has to offer.

Finally, you’ll need to provide your financial information, including your bank account number and recent deposit history. If you’re just getting started, you will need to include a personal guarantee for collateral. It’s important to note that collateral may increase your chances of approval, but it also puts your collateral at risk. If you don’t pay the loan, the lender can take the asset.

You’ll need a few days to complete the application. It’s best to do it in stages- fill out some and take a break. Then, come back and review what you’ve done before completing some more.

Conclusion

Many business owners apply for more than one loan, so even if you are denied by one doesn’t mean the others will too. If you have been denied on all fronts and can’t get the money you need, an alternative lender may be a great option. Contact Master’s Commercial Capital Group to learn more about business funding and what you need to know before you apply.