There are multiple reasons why you might be considering a small business loan. Maybe you’re looking to set up your own company – you have a great idea and you know you can find success, but you simply don’t have the available funds.
Perhaps you’ve been running your business for a while and you’re looking for a great new way to expand or upgrade, in order to attract new customers and exponentially increase your profit margins!
You may even be in a position where you need to clear debts or unexpected bills, but have no way to quickly access the cash you require.
Obtaining a business loan, even just a small one, might seem like a daunting task at first. There is a lot to consider: how much is the interest rate? What is the APR? How much will you end up paying in total?
Don’t worry: whilst initially it might be intimidating, applying for a small business loan is incredibly easy. In fact, it’s never been easier! Monark understands that you might need a small advance to improve the way your business works, which is why we’ve made it as straightforward as possible!
Here are some of the best ways that you can increase your chances of being accepted:
Apply for the right amount
The first thing that you should take into consideration is the amount of money that you’d like to borrow, and the duration of your loan.
If you’re applying for a larger amount of money, the lender could consider your business to be a higher risk, giving them more of a reason to decline your application.
You should also consider the amount of the loan in terms of repayments: you have to make sure that the monthly debits are affordable and sustainable for your business, or you could face some kind of financial difficulty.
The best practice is to only apply for what you need. A larger loan can increase the likelihood of a lender saying no, whilst a surplus of cash could lead to impulsive or unnecessary business decisions.
Similarly, if you apply for a smaller amount than what you need, you might not have enough for that upgrade or renovation!
What do you need the loan for?
It might seem like an intrusive question, but lenders will usually ask you what you need the loan for. This is so that they can assess your case during the application: for example, if a restaurant applied for a loan for a kitchen extension, the lender will understand that it could lead to an increase in revenue and assume that all required payments will be made by the due date.
If a restaurant was to apply for a loan for a new company car, the bank or alternative lender could see it as unnecessary.
When a business owner can articulate a well-planned and extensive explanation for what they need the funds for, it shows the lender that they have done their research and have a solid business plan in place.
Consider your Credit Score
Your individual credit score can have a massive impact on what lending options are available to you, even if you’re applying for a company or business loan.
A lender will, in most cases, review your credit history. This will show them your reliability in terms of making regular payments, or if you have a history of defaulting on bills. Lenders will also use your total outstanding amount of debt to assess your financial situation, so it’s always a good idea to ensure that your credit score is high!
If you have a strong credit history, you can also benefit from lower interest rates or longer-term payment schedules.
Make sure that you can pay
It goes without saying, but you should always make sure that you can make at least the minimum payment due on every loan each month.
You should assess your own business to see how much profit you make on a monthly basis – use this to determine whether applying for a loan makes financial sense.
Most lenders will require you to submit your monthly expenses as well as how much money you make, so it would be wise to carry out an income/expenditure assessment yourself.
Compare interest rates
Interest rates can massively vary from lender to lender, so you should always shop around to make sure that you get the best deal.
The interest rate will affect exactly how much you pay each month: the lower the interest rate, the less you’ll pay!
Interest is usually a percentage of either the total amount of the loan or the remaining balance, so longer loans at higher interest rates will cost you more than small, short term loans or cash advances.
When you apply for a loan, you should think about the representative APR, or the annual percentage rate. This is a conceptual figure used by companies to demonstrate the total amount you will have to pay back on a yearly or monthly basis, meaning it can be used to accurately determine what a loan will cost you.
Representative APR can be speculative, but it can still be an incredibly helpful tool to help you decide which product is right for you.
Applying for a loan
Now that you’ve taken the necessary steps to ensure the highest application success rate, it’s time to think about applying for the loan.
Monark has made it as easy as possible for small businesses across the US and Canada to obtain the loans needed to help their dreams come true! With thousands of happy customers and years of expertise, we have what it takes to help your business succeed.
All you need to do is fill in an online form that tells us a bit about you and your business, along with the desired amount of your loan, and you can have access to the money as fast as 24 hours.
You can easily complete your application online: