You’re a small business owner with a solid business plan. You have good credit, and you’re ready to put up collateral. If that sounds like you, then yes! You’re eligible for a no-money-down business loan. But just because you qualify doesn’t mean it’s going to be easy to get your hands on one of these loans. Here are some things to keep in mind before you should know how to get a business loan with no money:
You have a solid business plan
A business plan is a road map for your business. It includes the goals you have for your company and how you plan to achieve them, as well as a financial plan that includes your income and expenses. A marketing plan is also critical because it shows potential lenders how they will be repaid if they lend money to you.
All of these factors make up the foundation of an effective business loan application package, but don’t just include them in one document—your lender will want documentation from each of these areas before they make a decision on whether or not to give you a no-money-down business loan.
Your credit is good
If your credit is good, it means you have a history of paying bills on time. This is important in getting a loan because lenders want to know that they can trust you to pay them back. As experts like Lantern by SoFi say, “As a start up, you may not have an established business credit score. In this case, lenders generally evaluate your personal credit history.”
Your credit score can be checked by each of the three major credit bureaus: Equifax (www.equifax.com), Experian (www.experian.com), and TransUnion (www.transunion.com). If you have any concerns about inaccuracies in your report contact the bureau directly and file an inquiry or dispute form with them if necessary.
If your credit scores are high enough, it’s possible to get approved for loans without having cash down—that is, without putting any money down before receiving the loan itself!
You’re willing to put up collateral
You should be willing to put up collateral. This can be a valuable asset, like real estate or equipment.
Collateral is also what happens if you default on the loan. You have to give back the collateral in addition to paying interest and fees for using it as security during the loan period.
The collateral can also be used to secure your personal guarantee. You are personally responsible for making sure that the loan is repaid and will be held accountable if it isn’t. This means that you could lose all of your assets in addition to whatever you put up as collateral.
You own or are buying a property you can put up as collateral
If you’re looking for a no-money-down business loan, the first thing to consider is whether or not you own a property. You can use your home as collateral, but it must be worth at least the amount of your loan. If this is not an option for you, then buying a new property and using that as collateral may be an option.
If there are any liens or other encumbrances on the property (for example, if there’s a mortgage on it), they must be cleared before applying for a no-money-down business loan.
Hoping your business idea has grown from the seed that was planted here, and that you’re off to a great start.