How do you get a large business loan with fair personal credit? That’s a question millions of entrepreneurs ask all the time. Lucky you, here you’ll find the answer to that question!
Whatever you need the money for—working capital, facility expansion, equipment financing, you name it—applying for a big business loan with average credit means you take specific steps during the loan application process. And that’s what you’ll learn in this article.
To get a massive business loan with a fair personal credit score:
- Have a legit business
- Review your personal credit score
- Craft a detailed business plan
- Prepare clear financial and sales projections
- Shop for lenders that give big business loans for fair personal credit
- Get a cosigner or a apply for a secured business loan
1. Have a Legit Business
Register your business before requesting a big business loan with fair personal credit. Select the best legal structure for you:
- sole proprietorship
- limited liability company (L.L.C.)
- C-corporation
- S-corporation
- partnership
- limited liability partnership (L.L.P.), etc.
Pick the proper legal structure so you reap the right benefits in terms of filing taxes, preserving personal assets in the event of business failure, managing your business operations efficiently, and easing the burden of regulatory compliance at the state and federal levels.
Once you register your business name, register your business with the IRS so you can obtain an Employer Identification Number (EIN). Think of an EIN as a social security number for your business. Obtaining your EIN through the IRS is completely free. You do not need to contact a third party. You can apply and obtain your EIN online, over the phone, or through the mail.
2. Review Your Personal Credit Score
To get a big business loan with fair personal credit, review your credit score. Your credit score is a statement of your creditworthiness. Therefore, review your personal credit score before you apply for the business loan you seek.
Reviewing your credit score helps you identify any errors on your credit report that may need corrections. Your personal credit score also determines the terms and conditions of your loan—including the interest rate and repayment period.
To get the best business loan option available for you, ensure that all information on your credit report is accurate. To review your credit score, visit AnnualCreditReport.com. You have rights to a free copy of your credit report from these three national bureaus—TransUnion, Equifax and Experian—once a year.
3. Craft a Detailed Business Plan
To get a large business loan with fair personal credit, create a comprehensive business plan so your lender knows you have a legit business and are serious about the business loan you’re applying for. You see, a business plan is not just a document you write randomly. Oh no!
In a business plan, include relevant data such as your business’s products and services, competitive advantage and sale projections, to name a few. In general, pen a business plan that encompasses:
- The purpose of your business
- Your management strategy
- Your financial goals along with plans you have to achieve those goals
- Your marketing strategy
Keep in mind that if your business plan makes unrealistic promises, your lender may not grant you the business loan you seek. Therefore, be as honest as you can while crafting a business plan.
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4. Prepare Clear Financial Statements and Sales Projections
To get a massive business loan with fair personal credit, create—or have a professional create for you—compelling financial statements and sales projections so you can show the lender that your business had solid fundamentals. You know, things like revenue, income, return on investment, etc. have a big impact on loan approval odds. These things affect your business loan acceptance rate, big time!
Show the business lender how strong your company is, especially when it comes to future sales. To prepare a financial statement, you need to:
- Have an income statement: Your financial statement and sales projections begin with your income statement. Your sales and net profits give you the details of your financial history—which, in turn, gives you a clear idea of what future financial projections would be.
- Create a cash flow projection: Include your revenues and expenses in your cash flow projection. This projection shows cash inflows and outflows. When running a business, do not assume that sales equals money in the bank. Document them by creating a cash flow projection using an excel spreadsheet or other accounting tools.
Create a clear financial statement and sales projection so you can discern whether your business plan is realistic and what financial support you may need.
5. Shop for Lenders That Give Big Business Loans to Fair Personal Credit
To get a big business loan with fair personal credit, shop for lenders who can give business loans to individuals with fair personal credit. They’re either online lenders, banks or alternative lenders. Not all lenders will approve big loans to individuals with fair personal credit.
Therefore, ensure you’re with the right lender before you apply. Also, assess your lenders terms and conditions to be sure they are favorable to you—this helps you take out a loan within your payment capability
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6. Get a Cosigner or Apply for a Secured Loan
If you are applying for a big business loan with fair personal credit, you’ll need some sort of security or get a cosigner.
Applying for a secured loan means that you place collateral—any property that you own, that’s of worth; a car or a house—before you can get the business loan you seek.
A cosigner, on the other hand, is anyone—preferably a family member—willing to cosign your loan. He or she must be financially stable and must have a higher credit score than yours. Requesting a cosigner is such a big request to ask of someone. Be sure you apply for a loan you can repay.
Conclusion
To apply for a big business loan, have a legit business. Ensure that you register your business name, have a business account, set up a legal structure and apply to obtain an EIN for your business through the IRS.
Next, review your personal credit score, craft a detailed business plan, prepare a clear financial statement and sales projections, shop for lenders willing to loan to individuals with fair personal credit, and get a cosigner or apply for a secured loan if possible.
Now go get that big business loan you need!
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