Compared to baby boomers, Millenials and Gen Zers are 188% more likely to want to create a side business.
If this statistic applies to you, you’ll need to know how to get started. If you are a baby boomer wanting to start a business, prove this statistic wrong.
Starting a business requires a lot of financial responsibility, but how can you get business funding? Read on to find out.
Learn Your Creditworthiness
If you need to get business funding through the form of a loan, you should first learn how the bank is going to assess you. A lender will evaluate your loan application based on the following:
- Personal credit score
- Business credit history
- Cash flow
- Time in business
- Business Industry
Your credit score is a major factor that plays into the decision. However, the length of your credit history will be looked at in detail as well.
Decide on the Loan Type
Financial help for business owners comes in many different forms. When you opt for business loans, you have a choice.
Some of the most common business financing options include:
- Small business administration (SBA) loan
- Traditional bank loan
- Non-bank online loan
- Cash flow loan
Depending on your needs for business funding, you’ll choose one loan over the other. An SBA loan can take months to process but have favorable repayment terms.
A traditional bank loan will provide you with the lowest rates but you have to meet specific criteria. If you have poor credit, funding a business with a microloan might be your best bet.
One of the best tips for new business owners is to use a non-bank online loan because of the quick response time.
If these loans don’t seem like the right fit, find more information here about other business funding options.
Find a Lender
Once you understand the type of financing you want, you can search for a lender. You will be able to narrow down the search because not every lender will provide the loan service you need.
Generally, lenders come from three categories; direct lenders, lending marketplaces, and P2P/ peer-to-peer lending.
Direct lenders will be the credit unions, banks, and online lenders. A lending marketplace is a third-party platform that connects you with lenders based on your qualifications.
If you’ve been turned down by a direct lender, seek out P2P spaces. These platforms allow you to tell your story to find a lender who is interested in your business.
To get approved for a business loan, you’ll need to gather a few things to increase your odds. Lenders commonly ask for credit scores, bank statements, tax returns, licenses and registration, and legal contracts.
Last Step: Get Business Funding
The last step on how to get business funding is to turn in your application and hope for approval. If you are opting for a business loan, lenders will tell you exactly what you need to get approved.
If a business loan doesn’t seem right for you, there are other financial options to choose from. As a business owner, you will have ample opportunities to secure the funds you need.
For more business and financial advice, check out our blog for additional articles.