4 Essential Factors in Securing a Small Business Loan

4 Essential Factors in Securing a Small Business Loan

4 Essential Factors in Securing a Small Business Loan

Time is money, and it’s the major reason more and more small businesses are gravitating towards online business loans. Online lenders have a much easier application process and faster funding turnaround compared to traditional financing options. Thinking of applying for a small business loan online? Being armed with the right information before even starting your application will make this quick and easy process even quicker, and may help to increase your chances of approval.

1: Your business basics and history

One of the first things lenders want to know is who you are. This is mostly high-level information such as:

  • How long you have been in business?
  • Are you a sole proprietor?
  • Do you lease or rent your storefront?
  • A credit-check

The goal is to provide a full picture of your business right off the bat. Digging a little deeper, the underwriters will look to see things such as if you have had any tax issues in the past or have taken financing from a competitor. Unlike the banks, Evolocity will look at data from social media (Facebook, Yelp, etc.) and around the web, to see what conversations are being had about your business. It’s important to note that just because your business doesn’t get a shining star in each category doesn’t mean you can’t and won’t qualify for funding. What the team is analyzing is if your business is healthy overall, not just in a few select areas.

2: Your ability to pay back the loan

An Evolocity small business loan is repaid with daily “micro-payments”, making it really easy to budget for, but you will still have to adjust your budget to accommodate the payments. Evolocity gives you the ability to build your own small business loan; you decide which term and daily payment suits you best directly in the online application. You should be prepared with what size repayments you’re comfortable with prior to starting your application so take the time to speak to your accountant, or dive into the books yourself.

You’ll want to ask questions like:

  • What are my daily sales like?
    • Note: you need monthly sales of at least $15,000 to qualify
  • How much are you willing to repay on a daily basis?
  • How long do I feel I need to repay the loan?
    • Take into account seasonal trends in the near future

The terms of your loan will be built around the amount of capital borrowed and the timeframe you choose to pay back the loan in. You can tailor the product to meet your specific needs and determine if it is the right fit for your business. If you feel comfortable in your abilities to repay the loan given the terms, chances are the lender will too.

3: Measuring the value of current assets

The value of your current assets is not really necessary to qualify for Evolocity’s small business loan but if you don’t already have a detailed record of your current assets, it’s never a bad idea to put one together. Other lenders may require this information for their applications. What you’re looking for is to see which of your assets you can convert into cash within a year. The higher the dollar amount, the more likely lenders are to accept your application.

According to Investopedia, some examples of current assets are:

  • Cash (or cash equivalents)
  • Inventory
  • Accounts receivable
  • Marketable securities
  • Prepaid expenses
  • Other liquid assets that can be readily converted to cash

This article written by Nicole Pontius is a good guide on how to calculate the value of your current assets depending what type of business you have.

4: Evaluating your local market, industry, and economic conditions

Get a good grasp of your macro-environment. Not only are lenders looking to see how well your specific business performs, but how the world your business lives in is doing as a whole. Try and find some up to date industry stats and demographics that can show the strength of the market. Also taking the time to look at relevant economic forecasts will help you get an understanding of where your business is heading. Statscan is a great place to start.

How Evolocity makes getting a small business loan online easy

Evolocity’s goal is to provide the fastest, easiest and smoothest application process possible. Here’s a quick recap of what you’ll need to have on hand before you apply:

  • Business start date and general business information (such as legal business name and address)
  • If you lease your space, lease expiry date
  • Online business bank account login information or most recent business bank statements in PDF format (previous 3 months). You can upload these directly online!
  • Information on the business owner(s) (such as name, home address and birthdate)

The online application takes only a matter of minutes to complete, but should you need to stop, you can pick it up again later without losing any progress. You can also move your application offline, talk to a real customer service rep online or call in for support. Once you’re approved, the funds can be deposited in your account in as little as 48 hours.

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