Unfortunately, too many small business owners make easy-to-avoid mistakes when looking for financial assistance. These business funding errors could cause your loan application to be rejected or, even worse, result in a loan default. To help you get the funding you need, here’s a look into some common mistakes to avoid and tips for applying successfully.
1. Submitting Incorrect or Outdated Documentation
All financial and business documentation must be in order when you apply for a small business loan. Your lending file should be current and accurately highlight your ability to repay the loan.
Typically, lenders look for the applicant’s legitimacy, long-term company success, and future guidance. Some essential documents include income statements, insurance, business plans, tax returns, credit reports, balance sheets, bank statements, budgets, and cash flow projections.
2. Applying for the Wrong Type of Loan
A critical step in acquiring capital is understanding the best loan to meet your needs. A lender will want to know how much financing you seek and what the funds will be used for. This information can help them suggest the correct funding option for your business.
Many types of loans are targeted at different businesses, each with unique criteria. They can vary in duration, amount, terms, and interest rates. Self-assess your company and decide why you need the loan and how you can manage the payments before starting to submit loan applications.
3. Choosing the Wrong Small Business Lender
Before starting the application process, one of the top mistakes you should avoid is choosing the wrong lender. First, you must conduct detailed research to understand the lending market and your business’s current situation.
Make sure you use an actual lender, not a small business loan broker. Brokers charge a fee to act as a middleman between you and lenders, but they cannot approve or deny loan applications or service loans themselves.
Reviewing several types of loan providers — commercial and public banks, alternative lenders, peer-to-peer providers, and firms backed by the Small Business Administration — can help you better choose among the different products and programs available.
First Union Lending Is Here to Help Your Small Business
First Union Lending offers numerous financing programs designed with small businesses in mind. Our business loans are fast and flexible, with financing options ranging from $5,000 to $2 million. Call 863-825-5626 today to learn more about our various financing solutions to help your business grow and become successful.