Applying for your first loan can be a little daunting, but it doesn’t necessarily have to be that way. The more prepared you are, the better suited you will be to get approved and get your small business loan as quickly as possible. Traditional loans may be familiar to you, but online lenders are gaining popularity and deserve some serious consideration. Here are 5 important questions to ask that will guide you through the process and set you up for a successful loan application process.
Q #1 - Am I eligible for a small business loan?
All lending and financial institutions have varying eligibility criteria. Factors like risk and regulation impact what factors into your qualification for a loan with any particular institution. In Canada, typical criteria at the five major banks include: annual gross revenue less than $10 million, for profit business (not a farm, religious faction, or charity), and all assets purchased or improved must be specifically for purposes of the business.
At Lendified, loan criteria is clearly laid out and the application process is quick and easy. Canadian small businesses operating for at least one year and generating at least $100,000 in annual revenues are eligible to apply for a Lendified loan. Further eligibility will then be determined based on Lendified’s Lendscore algorithm which assesses your business quickly and efficiently. What this means for you - the business owner, is that you’ll get a same day response and know very quickly where you stand with eligibility.
Q #2 – What is the likelihood by loan application will be approved?
The likelihood of approval will depend a great deal on your personal credit score. You should carefully consider the state of your credit score and any justifications that may have to be made. There’s also the potential that a hard credit check will be done which can impact your credit score in the future.
As mentioned above, Lendified uses the Lendscore system. This algorithm considers your credit score and will provide approval based on your information. The system is unique in that it looks at broader criteria regarding your business, with a lesser focus on your credit check. The result of this is higher approval rates.
Q #3 – What are the terms of my business loan?
It’s very important when applying for a small business loan that you become aware of the terms that are agreed upon. It’s of clear benefit to you to have repayment terms that can be adjusted for your specific needs. The information you should be seeking includes length for repayment, total amount of money being lent, monthly payment amount, and exact payment dates. Being sure of this information up front is necessary to avoid issues or misunderstandings down the road.
Online lenders like Lendified are great because they offer flexible loan terms that let you personalize your borrowing experience. In many cases small businesses may still be in a development or transitional stage, and having the ability to customize your terms is crucial. Lendified lays out the potential terms for your loan, and then provides you with a specific estimate during your application.
Q #4 - What documentation or paperwork is required?
Documentation and paperwork can be significant obstacles in the process of applying for loans traditionally. The usual requirements are (at least) proof of income, credit check, proof of repayment, and a solid business plan. If any of this paperwork is insufficient, you could face considerable delays.
The increase in online finance and business has caused a shift in how lending works. The reality is that online loan procedures can very easily avoid most of the aforementioned issues. Online lenders like Lendified have a clear advantage because their loan application is done strictly online. The process is also much more simplified, consisting of only a few required questions.
Q #5 - Is There a Penalty for Early Repayment?
Early repayment is a great affordance to have available to you, and presents the opportunity to repay your loan if you are more successful than anticipated. With traditional bank loan repayment, the terms are somewhat problematic.
The fact of the matter is, banks often don’t want you to repay your loan sooner than what was originally agreed to, because that negatively impacts their profits. Some banks will even hit you up for the interest on a loan even if you’ve repaid the principal balance in advance.
Lendified features a great tool called the small business loan calculator, which serves as an entry point to the loan application process. Using the calculator, you’re able to adjust the terms of repayment for your loan. This doesn’t quite afford you with early repayment terms – but it does provide a choice in the length of time for your loan repayment terms to take.
Hopefully by reviewing these 5 questions, you’re able to identify a course-of-action to begin preparing for your loan application. The advantages of online loan services like Lendified are quite clear, and provide great new lending opportunities for you and your small business.
For any further questions that were not addressed, please refer to the Lendified FAQ section.