Screenshot

If you are looking for a way to raise funds for your business, a term loan is the way to go. This type does not require much and it's a great way to raise as soon as possible as long as you meet the terms of the lender. With this loan type, you receive a certain amount of cash. You can either repay it regularly or in installments over a fixed period. It’s just about the right option if you are looking to buy equipment and expand your business and working capital. But what are the business term loan requirements, and what can you do to meet them? We have all the deets in this blog post. Read on to learn more.

 

What Lenders Look For

 

The first thing you have to understand when it comes to term loan requirements is that lenders have their own set of rules when it comes to qualifying for term loans. But you can give yourself an advantage when you apply for a term loan by knowing exactly how it works.

 

Strong Credit History

 

This is what lenders first examine when they look at a potential borrower’s application. A high score is a reflection of how trustworthy and reliable you are with your dues, and it also indicates financial health. Even though bad credit term loan options or bad credit business loans can be an option for some lenders, the chances of your loan getting approved are higher if you have a high score. A good credit score is also likely to get you better terms or lower business loan interest rates.

 

Business Financials

 

This is something quite fundamental. Lenders will need your financial statements when they are going through the process of approving your term loan — a profit and loss statement, a balance sheet, and a cash flow statement. This will help them determine the financial health of your business and whether you can carry on repaying the loan on time or not.

 

Time in Business

 

For a business term loan, more often than not – your business has to be at least two years older for it to be considered for approval. While there might be one or two lenders who are willing to give in a bit and provide you with a loan as long you can meet your revenue goals, there are others who might just flat-out reject your application because the tenure is too short. If you are a startup that is less than 2 years in existence, look for other forms of funding.

 

Collateral

 

Some term loans are currently attached to an asset, like an equipment loan or a term loan capital attached. However, some lenders might also agree on the loan without asking for anything.

 

The Application Process

 

Applying for a business-term loan is much easier when you’re prepared. Here are a few quick steps to get you started:

Find the Right Lender: Find a lender that provides small business term loans with favorable terms.

Gather Documentation: You’ll need to have your business plan, financials, tax returns, and bank statements available.

 

Why Preparation Matters

 

Adhering to those business term loan requirements is a necessary evil. But instead of hoops to jump through for the heck of it, the reason the bank or lender has these is to make sure that your business is indeed financially conscious with its money-borrowing practices. So rather than worrying about the reams of docs you’re going to need to track down, think about how much time you’ll save! When you already have what you need, that application can go right in, no fooling around. An institution like Bluevine comes up as a popular choice when considering a fast and small business-friendly term loan option.

 

Final Thoughts

 

The more acquainted you are with what's needed to secure a business term loan, the better prepared you are to secure the capital you need. You also become familiar with the type of loan term and which lender offers them so that you can comfortably decide which option is the best for your business. After you have your term loan, you only have to worry about managing the capital and growing your business. If you need a new space or need some equipment, or you just simply need some additional working capital, a term loan is a very powerful tool.