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Getting business loans from big banks has become difficult as of 2024, as lending to small businesses has been on a downward slope. In one month in 2023, it decreased from 13.1% to 13%, so business owners are looking forward to alternative means and smaller banks.
Thus, small banks have approved more loans for small businesses, increasing from 19.3% to 19.5%. As small banks become more dependent on small businesses, this has opened a great opportunity for these borrowers to adapt to today’s economic climate.
Here, we will understand the successful bank term loan application process.
A bank term loan is a lump sum of cash given upfront in exchange for a specific borrowing time. The borrower must agree to pay the lender with a fixed repayment schedule, which can include either a fixed or floating interest rate.
- Benefits of a bank term loan
A bank term loan is the most viable option if a small business needs fast funding. If you proceed through a quicker application process, you get the most secured cash flow with a favorable rate. After the application is approved, funds are delivered within seven days. Also, if the term loans are repaid on time, it can help build business credit and pave the way for growth and success.
- What is the application process?
If you have made up your mind that the bank term loan would be the right way to finance your business requirements, here are the aspects you must consider:
- Check the qualifications
To qualify for financing, you need to consider your credit score, annual revenues, and the length of the business. If your credit score is 690 or more, you will be offered loans at a low rate.
- Compared the lenders
It would help if you considered which lender would suit your business, whether a bank or credit union. Compare their products and terms of qualification.
- Preparing the documents
You need to produce documents, such as – business financial statements, business and personal tax returns, business legal documents, and personal bank statements. Keep all your financial records up-to-date and communicate with your accountant every minute. You might have to put up collateral to guarantee acquiring a loan.
- Personal guarantee
You must sign a personal guarantee, which is an agreement stating that the borrower must repay the loan with personal assets if the business defaults.
- Submission of the application
Complete the application by following the lender’s instructions. Provide all the necessary documents and take advantage of the lender’s assistance. Fundandgrow.com can help you get the best funding for your small business and fulfill your business needs.
Have Patience!!
Wait till your loan gets approved and you receive the loan agreement from the lender. You will get a binding document that establishes the terms and conditions for the loan and states the agreement between the business and the lender, saying the promises made by both parties.
Before you sign it, read the loan agreement carefully, ask questions, and get all your queries answered. You can appoint an attorney to help you understand the deal and all the clauses.