Connect with us

Business Finance

6 ways to avoid wasting time when applying for a business loan

(Business Finance) Applying for a business loan can be a huge timesuck, but it doesn’t have to be if you know the right questions to ask yourself before beginning the process.

Published

on

cash money

cash money

The small biz challenge du jour

“One of the biggest challenges faced by small business owners is finding the capital they need to fuel growth and fund working capital,” said Ty Kiisel, a contributing author at OnDeck, a tech company aiming to solve small business’s biggest challenge: access to capital.

Kiisel notes that finding a loan can be a time-consuming process, citing former administrator of the SBA ,Karen Mills, who argues that the average small business owner spends about 25 hours filling out the paperwork associated with completing a loan application.

bar
“Asking yourself a few key questions before you sit down with a lender will make a lot of difference in how seriously they take your loan application,” said Kiisel, adding, “how long it takes to get an approval–and help you avoid wasting a lot of your precious time.”

In his own words below, Kiisel offers the six questions you should ask yourself prior to beginning any loan process:

1. Can I really afford a loan?

Dumb question, right? Not really. One of the first questions every lender wants answered is, “Can this borrower repay the loan?” That’s one of the reasons they want to see some experience in business and your bank statements. If you can’t honestly answer, “Yes, I can afford a loan payment,” it’s not likely your loan application will end with a “Yes” from the lender.

2. How much do I really need?

“As much as I can get,” is never a good answer. Small business owners always need capital, but borrowing capital can be expensive–in some cases very expensive. Paying a premium for more capital than you really need just doesn’t make sense. What’s more, in some cases it’s possible you might need more than what you’re asking for. You’re wasting time with the “As much as I can get” answer. It tells the lender you haven’t really thought enough about what you’re going to do with the capital and can even be a red flag that causes a loan officer to disregard your request completely.

3. Why do I need the money?

This question fits hand in glove with Question #2. Borrowing capital to take advantage of opportunities to purchase such things as equipment or inventory at a discount is a great reason to access credit (provided you can positively answer Question #1). Even if you need to augment a short-term cash flow need or have some other need for financing, you should be able to articulate exactly why you need the money and how much you are looking for. This tells the lender you understand how to use borrowed capital and you’re not a waste of his or her time.

4. Do I have all my ducks in a row?

Although every loan and every lender is a little different and requires different documentation, if you have some of the most requested documents in order before you visit a lender (and this applies to both traditional and online lenders), you’ll avoid wasting everyone’s time. Start with your past two years of business and personal tax returns, the last three months of bank statements, and a list of other loans or lines of credit you may have. Standard financial documents like a current P & L statement should also be at your fingertips. It’s not enough to have the documents either, it’s important to really understand what all this information means. I once spoke with a lender who said, “If I know more about a business by looking at the financial data than they do, I’m not going to offer them a loan.”

5. What’s my current credit score?

Did you know you have both a personal and a business credit score? If you’ve only been in business for a few years, your personal credit score will be part of the equation, but it doesn’t tell the whole story. Your business has a credit score too. Dunn & Bradstreet, Experian, and Equifax are the three major business credit reporting bureaus and they all have different scores for displaying a business’ credit worthiness. A bad credit score doesn’t necessarily mean you won’t get a loan, but it could mean you’ll need to pay a little more for the capital. It might also make a difference in where you should be looking for a loan.

6. What are my real chances with this lender or loan type?

It’s really important to understand the nature of the financing you’re looking for. For example, if your credit score is weak and you don’t have five or six years under your belt, a traditional loan at the bank, or maybe even the SBA, will be a waste of time. Nevertheless, even if you have less-than-perfect credit, but have a healthy business with a steady cash flow, there are a lot of online options that will work for you if your first year is behind you. Investigate and study your options before you start applying to save time.

Knowing what to avoid is the first step to escape wasting time. More importantly, it may even help you save time–time better spent making your business successful. It’s often said that time is money, ask yourself how much is your time is worth.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

Business Finance

COVID-19: Governors fail renters, a 90-day rent freeze is the only option now

Independent contractors whose only sin is renting instead of owning, are facing evictions even as Governors put tiny bandaids on the situation. A 90-day freeze is the nation’s only option to avoid mass migrations or spikes in homelessness.

Published

on

COVID-19 moving boxes

2020, it seems, is the year of rebranding—even when it comes to our impromptu recession brought on by a variety of factors (but largely thanks to COVID-19). Despite the negative connotations of widespread economic disaster, some people, such as St. Louis Federal Reserve President James Bullard, are regarding this instance as “an investment in U.S. public health.”

Should we all be so optimistic? Bullard seems to think so.

To be fair, James Bullard’s “optimism” also accounts for taking a “$2.5 trillion hit” to the economy, so it’s not all sunshine and dancing unicorns (this time). However, the long-term outcome of handling this crisis correctly—a process which involves bailing out small businesses, matching wages, and contributing to rebuilding and supporting our healthcare infrastructure—will be, according to Bullard, positive.

Bullard’s optimism does come with an important message: As with pretty much anything, the simpler we can keep solutions to this problem, the better the outcome will be. We’re not off to a great start; between states’ varying responses to COVID-19 procedures and mixed congressional support for a stimulus package, the process of dealing with economic fallout has become more complicated than some—Bullard included—would consider “ideal”.

Unfortunately, there isn’t really an “ideal” outcome here that is also practical without requiring a heretofore unseen level of cooperation and cohesion between political parties and state-based cultures. In the event that we can actually pull together and actively invest, as Bullard suggests, in our infrastructure, the implications for our economy will ultimately be positive—even if only in a pyrrhic victory kind of way.

In unprecedented times of crisis—you know, like right now—a little bit of optimism doesn’t hurt. Over the course of the next few months, you’ll hear all sorts of different takes on the situation; some people—those who identify as “realists” but really just enjoy bumming people out—will actively speak out against positive attitudes, while others will avoid “getting their hopes up” because they don’t want to be disappointed.

But, if Bullard’s optimism is to be believed—and we’re choosing to think it is—you have full permission to let yourself hope, at least for now.

Remember, there are a couple of things you can do to bolster your immune system without medicine during this time. One of them involves keeping a positive outlook, and the other one is eating plenty of garlic; we’ve found that one accompanies the other.

This story was first published in our Real Estate section.

Continue Reading

Business Finance

Gov. Cuomo first to issue 90-day moratorium on commercial, residential evictions

(NEWS) NY Governor, Andrew Cuomo is the first state leader to put a halt to all commercial and residential payments in an effort to stem the COVID-19 crisis.

Published

on

gov cuomo

New York Governor, Andrew Cuomo is the first state governor to put a moratorium on residential and commercial evictions in response to the COVID-19 outbreak, specifically hitting pause for 90 days in his state. This is part of a $10B relief package that includes utility payments missed during this outbreak as the state (and all states) are strained by the global pandemic.

This will not only help renters to find stable footing as so many have lost their jobs overnight, but commercial renters (like restaurants) that are worried about being evicted during a time that they were shut down by the government.

Reactions have mostly been positive, but many are still pushing for a freeze on rent, essentially rent forgiveness during this period since mortgage holders can roll their 90 days on to the end of their loan term, but renters cannot.

For many landlords, rent is their exclusive income and they have very few units, but they too will be under a mortgage freeze on their buildings under this Order, providing some relief. Not to mention Tax Day just moved from April 15 to July 15.

Meanwhile, a state group, Housing Justice for All, is calling for the rehousing of every homeless individual using emergency rent assistance and in vacant homes. They cite the risk of viral spread through the homeless shelter system, as well as viral possibilities among homeless people living on the streets.

There is no known answer in this time of being tested, but a freeze on rents and mortgages in New York will likely lead to other governors taking the same route, and renters might be able to breathe a little better soon, especially those who have lost their jobs and independent contractors whose business immediately died on the vine.

We’ll be watching for other states’ reactions to rents and mortgage payments.

Continue Reading

Business Finance

COVID-19: Self employed Texans get some relief benefits

(BUSINESS FINANCE) Self employed? Worried about the corona virus hurting your business? Texas says you’re STILL eligible for cash-related COVID-19 coverage!

Published

on

self employed

When I heard ‘It’s hard being your own boss’, I thought people meant employee reviews were harder to do since you have to carry both parts of a tough conversation in your home office.

Now, watching as self-employed artists, caterers, events specialists and more are struggling in the wake of the COVID-19 pandemic, the image is less ‘Ha!’ and more ‘AH!’.

It’s bad out there, y’all. And my heart goes out virtually, as per CDC guidelines. But in every viral cloud, there’s a colloidal silver lining. In the great state of Texas, that lining is: You’re probably eligible for disaster-based unemployment.

Yes, really!

Straight from the Texas Workforce Commission’s mouth: If your employment has been affected by the coronavirus (COVID-19), apply for benefits either online at any time using Unemployment Benefits Services or by calling TWC’s Tele-Center at 800-939-6631 from 8 a.m.-6 p.m. Central Time Monday through Friday.

Now how does that cover the self-employed? Simple…kinda.

You’ll need to apply through the Disaster Unemployment Assistance and then take the extra steps of providing different proof than your 9-5 friends.

Firstly, you have to prove you’re self employed. If you’ve been paying you under the table, this is where the poop hits the fan, I’m afraid. The government will need things like (any given one of these): Insurance bills, business license, a recent ad, an invoice, or sales records.

Were you just about to start your own business when all this went down? Fortunately you’re covered too, so long as you have proof of prospective self-employment, say: The deed to a building you just bought, loan documents, ‘Grand Opening’ announcements, and so forth.

For the full list of documents that suffice, visit the TWC site directly and check what proof your pudding needs.

This situation is a Corona-cluster-cussword, but there’s help out there.

Reach out. Grab it. And then wash your hands.

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!