Small businesses that were affected by the Covid-19 can still get off the ground and grow to their desired level; although huge finances are needed this time around because of the negative effect of Covid-19 on such businesses.
Hereunder, you can request a Covid-19 loan for small businesses which in turn can be seen as a normal business loan.
Because of the negative impact of Covid-19 on the entire nation, some special programs are available in the form of both grants and loans for small business owners who may be interested to obtain a loan to standardize their business.
Over the years, we have noticed that for small businesses to rapidly grow and compete with other outstanding popular businesses, there must be a need for finances, and one of the easiest ways to get the finances is by requesting loans and grants from third-party platforms.
Moreover, as a small business owner, you can apply for loans directly from financial institutions or other financial institutions such as credit unions (for commercial loans though).
When it comes to grants and loans for assisting small businesses to recover from the effects of Covid-19, small business owners are required to apply for loans through a bank to the Small Business Administration.
In this guide, we will elucidate how you can apply for a small business loan for Covid-19 as a business owner. Let’s get started.
How to Apply For Small Business Loan Covid-19
From our findings, we culled the best ways to apply for a Covid-19 loan for your small business. Continue reading below to find them out.
#1. Have a reason for the amount of loan you need for your small business
When requesting a loan from financial institutions such as banks or other platforms, you must have a genuine reason why you need such an amount of loan.
Besides this, the business you are investing the fund, you are requesting from a financial institution must be capable of producing both the amount of money you collected from the financial institution and the interest that will be attached to it.
Over the years, we noticed that majority of small business owners don’t know the exact amount they need to push their business to another stage.
Meanwhile, owners of small businesses that are still in their start-up stage may only know the processes that are involved in finding out the number of funds that they need for their small businesses and to an extent a little knowledge of why they need those funds.
We recommend that as a small business owner who as a result of Covid-19 needs a loan; whether your business is still in its start-up stage or not, you need to sit down and count the cost of obtaining the loan and also how much you needed to move your business to the next stage.
Because of the negative effect of Covid-19 in all over the nations, lots of financial institutions are willing to give grants and loans to business owners who may be interested in obtaining a loan for their business.
Furthermore, to help business owners answer the question of how much they need when requesting a loan, you need to prepare your business financial statements alongside your business plan.
This will in turn help financial institutions to be able to know more about your business and how you can repay the loans that they are about to give you.
#2. Check Your Credit Score and Credit History
To avoid the challenges that financial institutions face after giving out loan to business or individuals, the majority of the financial institutions often demands your business credit score or credit history.
This will help them to evaluate your business standard and to know if you are capable of paying back after the loan has been issued to you.
Since your business credit score and credit history are compulsory when requesting a loan in a majority of the financial institutions, we recommend that you take some time and obtain your business or personal credit score history and arrange it in an accessible format.
You can request your credit report from some major credit history reporting agencies within your locality.
After collecting your credit report, ensure that you go through it to see if you will spot any errors. Incase you encounter an error in your credit reports, report to your agency with a letter notifying them about the error that you spotted in your credit report, also request that it should be fixed in due time.
Moreover, if there are some errors that the agency cannot fix, you can further file a report concerning your credit dispute.
When you have resolved all the errors in your credit card (if any), a credit score that is up to 700 is quite great for obtaining a loan from financial institutions and it will thereby increase your chances of your requested loan being approved.
#3. Review your borrowing options
Here, we recommend that you check out financial institutions near you. The financial institutions or commercial banks that are situated within your locality can easily release loans to you rather than commercial banks that are located outside your residential place.
Over the years, we noticed that people that went straight to national commercial banks to obtain huge loans ended up with a disapproval letter.
To avoid being in this category, always seek a loan, especially for your small business in the financial institutions within your locality.
The chances of you obtaining a loan from small banks that are within your locality are very high. You can as well request a loan from non-banking financial institutions. For instance, credit unions.
Besides this, if you belong to any local credit union, you can utilize that platform by discussing with the loan officer in that organization requesting that you need some amount of loan for your business.
If your local credit union can be able to give you the amount of money you need to loan for your small business, you can proceed in obtaining your desired loan from such a platform.
Moreover, there are lots of other financial institutions such as microfinance banks that you can utilize in obtaining a loan for your small business.
Some of the reasons why we discuss the majority of the ways that you can use to obtain your loan upon reviewing your loan borrowing options is that some financial institutions or lenders may reject your request while others will accept it with the same documents that you presented while applying for the loan in the platform that rejected your request.
#4. Locate any local SCORE and SBDC Offices in your area
Within your business locality, there must be some SCORE and SBDC Offices that are closer to you.
If your business is quite small, before obtaining a loan from financial institutions, you should seek some advice and help from experienced executives.
Moreover, if there is any chapter of SCORE within your locality, they are quite an amazing platform that is willing to give you advice and help for free whenever you consulted them.
SCORE is simply a non-profit and volunteer group of retired business executives who are willing to freely help small business owners scale through in their journey to becoming successful in their businesses.
While looking for a local SCORE, if you were not able to find one within your area, you can get online advice and online counseling for your small business before venturing into obtaining a loan for your business.
On the other hand, if there is any university near you, you can easily access a local chapter of the Small Business Development Center (SBDC) within the university.
The Small Business Development Center (SBDC) is part of the Small Business Administration (SBA) and it exists to help both small businesses and existing businesses grow organically.
These two organizations Small Business Development Center and Small Business Administration normally help small business owner’s help with their loan application process.
As regards COVID-19 funds, they can assist you with the application forms which will in turn increase your chances of financial institutions approving your loan request.
#5. Organize your business plan
Before any financial institution can be able to give you a listening ear when requesting a loan from their company, they will, first of all, examine your business plan to see what you intend to do with the loan you are requesting for.
Even local lenders in your area will still demand your business plan. This is quite a reminder to any business owner who has the intention of requesting a loan from any financial institution or lender.
On several occasions, we realized that without presenting an outstanding business plan, your chances of getting a loan from any financial institution or lenders will be very low.
The simple reason is that financial institutions or lenders give people loans because of the interest they will benefit from the people to whom they loaned money.
Despite your credit score and your reasons for requesting loans, every financial institution will surely demand your business plan before considering giving you a loan, regardless of the amount of money that you need.
Moreover, you should be aware that a business plan consists of several parts. For instance, a well-prepared business plan should have many years of past as well as project financial statements of your business.
Besides this, a good business plan should have a statement of collateral or probably the value of assets you will use to secure the loan.
In addition, you will need to add a detailed analysis of the market your business will serve alongside your statement in your statement report.
Concerning COVID-19 loans, you need to be specific about what you are going to achieve with the loan you are requesting for.
#6. Organize your presentation and book an appointment
Regardless of how authentic your business plan is, you still need to make your loan application very presentable and compelling.
You need to create time and organize your loan form before presenting it to your loan officer at your financial institution.
Over the years, we noticed that even after presenting your loan request in an organized format, you still need to persuade the financial institution or lender that you are requesting your business loan from.
This will in turn compel your loan officer to hasten your loan application processing.
When organizing your loan application, put it alongside a professional package that you are going to hand to your loan officer.
This professional package should contain some of your narratives alongside financial statements, spreadsheets, charts, as well as graphs where necessary.
We recommend that you add an Executive Summary as a part of your professional package.
From our research, we noticed that majority of loan officers read the Executive Summary first before deciding whether to give you your requested loan or not.
We recommend that you make an appointment with your loan officer and also book extra time if possible, so that you will have the opportunity to present your short presentation, alongside visual aids depending on the type of business that you are operating.
#7. Request for COVID-19 Paycheck Protection Program
Although the paycheck protection program is designed for businesses that have about 500 workers or less, it is a forgivable loan that can pay for about eight weeks of a business’s payroll costs.
The Paycheck Protection Program is to help ease the cost of running your business and also to retain your workers and also to hire back the workers you laid off because of finances.
Paycheck Protection loan also covers your business rent and utilities. On the other hand, if your business retains its full equivalent headcount and wages for eight weeks, the loan will be forgiven after it was given to you.
Moreover, the Paycheck Protection Program for COVID-19 applicants is quite hard to obtain and we recommend that you should not rely on it because it can disappoint you.
Conclusion
As a small business owner, even if the COVID-19 drained the little growth you have experienced in your business, there is a remedy for you.
Applying for COVID-19 loans by utilizing our detailed article on how to apply for small businesses loan will skyrocket your business success within a short period.
We almost elucidated all the processes that will help you to successfully obtain a loan from financial institutions or even lenders easily.
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