Like every small business owner does, you may have found out that getting access to funding is the most gruelling aspect of growing your business. If you are in the position of applying for financing this year, then it behoves you to keep in mind that every lender – not least banks, online lenders and credit unions – keeps an eye out for the same five categories of credit. You should also note that even though these credit categories remain fundamental wherever or whoever you turn to for credit, banks may use completely different credit scoring models as compared to online lenders. With bank loans for instance, you would need to show five years of profitability whereas your sales history of at least 6 months would be required by online lenders. So what are these five things lenders look out for before offering you assistance? Read on to find out.

Character

When evaluating character, lenders are looking to form a concrete idea about not only how reputable your business is but if it is a stable one as well. They may want to find out how long you have been in business, how much of  industry experience you’ve garnered over the years, what your record is when it comes to paying suppliers and bills at due dates etc. In the era we live in today, it has become much easier to measure your ‘standing’ as a business, thanks to social media. Your profile, recent activity, reviews of your business can thus be easily assessed by your prospective lender

Capacity

Each and every credit lender would want to know whether or not you have the capacity (ability) to repay the loan. This is very important and in order to evaluate your ability to repay the loan, majority of traditional lenders make use of intricate debt to equity models. Your ability to repay the loan nonetheless will usually be determined by your current bank statements. Say, the loan repayment is $5,000 per month and your average monthly ending balance is $2,000; you might not be eligible to qualify.

Collateral

In almost every case, you would be asked what assets you can provide to secure the loan. Maybe you own a car, a home or some other personal assets. Whatever the case may be, your lender will consider these assets before granting you your loan request. If you have more collateral, all the better as most lenders would be willing to lend you money

Capital

When we talk about capital, what we simply are on about is how much you own minus how much you owe. That is, the value of your assets less your liabilities. If you have more capital in your business, your chances of landing the loan would pretty much be high as well.

Conditions

There are a couple of external circumstances that are likely to affect your financial situation and ability to repay the loan, including the state of the local economy, the level of competition in the industry that your lender will look at.

At SunWise Capital, our minimum qualification is less than those of banks because we are focused on getting you approved so your business can thrive with a small business loans. Wondering if you are eligible for a small business loan? Follow this link to get in touch.