How to Qualify for Small Business Loans in Los Angeles
There are many options you can use to secure funding for a small business. One of the most successful ways is getting a Small Business Administration (SBA) Loan. These are the best loans for financing small business ventures because of the flexible terms and low-interest rates they offer. Moreover, these loans are backed by the federal government. While these small business loans Los Angeles are the most popular financing options, not every business can get them. Here are a few things you should do to increase your chances of qualifying for a small business loan.
Build Your Personal and Business Credit Score
A personal credit score ranges from 300 to 850. The higher the score is, the better. The score shows your ability to repay personal debts. The score is further determined by:
- Your payment history
- Amounts owed on credit cards and other debts
- How long you have had credit
- Types of credit you use
- Recent credit inquiries
As a small business owner, your personal credit score will be considered when applying for a loan. The key to building a great credit score is paying your bills on time. You also need to go through your credit report because errors in these reports can damage your score. If you notice a problem with your credit report, you need to file a dispute.
If your business is well established, you can check out your business credit score. This ranges from 0 to 100. More often than not, to qualify for small business loans you will need good personal credit as well as a good business credit score.
Understand the minimum qualifications and requirements of the lender
Lenders are not all the same. They have varying minimum qualifications and requirements. Some will be understanding if you are underperforming in some area but over-performing in another. Your best chance of qualifying for a small business loan is to meet all the minimum requirements.
As a borrower, you will need to meet the minimum criteria related to annual revenue, years in business, and credit scores. If you have ever filed for bankruptcy or any other past delinquency, most lenders will turn you away.
For an SBA loan, there are additional requirements you have to meet. For example, your business has to meet the size standards since these loans are available only for small businesses. You must also have strong personal credit as good business revenue. You also need to be current on government loans. This means if you are late on federal student loans you will be disqualified.
Get your financial and legal documents
Lenders will ask for several financial and legal documents when applying for a loan. The documents may include:
- Income statements and balance sheets
- Business licenses
- Commercial leases
- Articles of incorporation
- Personal and business bank statements
- Personal and business income tax returns
- Financial projections
- A resume that shows relevant business experience or management
Applying for small business loans Los Angeles is not as straightforward as most people assume. You have to be very careful whom you approach for a loan. Taking time to understand the terms and conditions is crucial to avoiding problems.
If you are looking for small business loans, ABO Capital can take care of all of your needs. Whether you are looking for a commercial real estate loan, or a residential real estate loan, we will take care of it for you. If you are ready to apply, you can fill out the application and we will be in touch soon.