These days, many small business owners have likely heard all the stories about how much easier it’s becoming for companies of their size to obtain financing from banks that would have, in the last few years, been far more difficult to obtain. However, that doesn’t mean that banks are now just giving away money, and as such entrepreneurs will still need to do all their due diligence to make sure they’re in the best position possible to receive approval.
Small business owners will need to know a good deal about their companies, industries, and local areas to make sure they can succeed in obtaining a loan from lenders of any type these days, because even as credit availability has grown, it’s still not exactly easy to come by when compared with pre-recession norms, according to a report from the Arizona Daily Star. For instance, owners should know that the median small business loan now issued by banks comes in at about $130,000 or $140,000.
They’ll also need to have all the necessary documentation to back up their applications, the report said. This should include both business and personal credit histories, financial statements for the past as well as projections for them in the future, business plans, and more.
Where else can companies turn?
Of course, banks are still keeping small business credit somewhat tight, so finding approval may still be difficult, the report said. As such, it might be wise to seek such financing elsewhere, such as through the U.S. Small Business Administration. This federal agency tends to be far more flexible about the kinds of companies it will lend to, and how much money it will distribute.
“Startups are the most difficult ventures when it comes to securing financing,” Natalie Goriel, who works for the Small Business Administration, told the newspaper. “Many startup businesses seek financing from family members, friends and credit cards. Your best bet by far is SBA assistance.”
Owners who want to shore up their bottom lines before they apply for any type of financing might want to consider the ways in which they might be able to cut costs overall. For instance, if they can find more affordable small business insurance policies, such as commercial insurance, might be able to reduce their expenses by thousands of dollars per year, and therefore keep their books in potentially better shape.