8 Steps That Will Help You to Get Business Loans in COVID-19’s Crisis

The most popular way to get money is to take out a loan from a bank or another financial institution. Obtaining a loan is no longer as easy as it used to be. Banks have been limiting loans to small businesses due to the financial downturn that struck during COVID-19. Breaking things down into manageable steps – from qualifying to finding lenders to applying for a small business loan in COVID-19’s crisis – will assist you in obtaining the financing the business requires. 

Now let’s talk about 8 steps that will help to get Business Loans in COVID-19’s Crisis:

1. Find out if you’re qualified for a business loan

It depends on two factors to qualify for a business loan. 

1. Business running time 
2. Repayments

• Business Running Time

Lenders will take into account how long the company has been in operation. Many online small-business loans require a minimum of one year of business experience, while most bank loans require two years.

• Repayments

Examine your company’s financial books, particularly cash flows. Determine how much you can afford to put into debt repayments per month. Be sure to account for the fact that specific online lenders demand regular repayments.

2. Determine the sort of loan you need

Lenders inquire as to whether you require a small business loan. The answer most likely falls into one of two groups that will help you decide which form of business loan is best for you:

• You want to start your own business: Lenders expect cash flow to sustain debt repayment, but businesses in their first year are unlikely to approve a loan. You’ll just have to focus on alternative sources of venture funding, such as company credit cards and personal loans.
  
• You would like to keep track of your day-to-day expenses: A business line of credit may be a good idea. This type of flexible lending allows you to access funds if required to meet expenditures such as salaries or additional costs such as maintenance, providing a convenient safety net as needed.

3. Credit Score

Several of the instruments lenders assess a borrower’s reputation through credit reports. If the credit report reveals a pattern of late payments, you can be turned down for a loan. Any of the three major credit bureaus, Equifax, Experian, and TransUnion, will provide you with your credit history for free. Banks tend to sell low-interest business loans to customers who have a minimum credit score of 700. Before applying for a business loan, you can also improve your credit score and pay off any loans.

4. Compare Small Business Loans

Small-business loans can be obtained from two different sources: online lenders and banks. Each usually has many products, although one can be superior to others in some situations.

You can get a business loan from an online lender if: 

• You don’t have any assets to put up as leverage
• You need financing right away

These lenders’ APRs are not as small as those offered by conventional banks, but acceptance rates are higher, and financing is quicker than 12 hours as compared to banks.

5. Loan Papers Documentation 

Make sure you have all of the required documents before applying—the method of obtaining a collateral free business loan streamlines if the authorities can check the files hassle-free.

You need to apply a variation of the below:

• Tax reports on both businesses and individuals
• Bank statements on both your business and personal accounts
• Financial statements for a company
• Documents of business law (e.g., articles of incorporation, commercial lease, franchise agreement)
• Business Proposal

6. Cash flow

When it comes to assessing the stability of your business, cash flow – a calculation of how much cash you have on hand to repay a loan – is the very first factor lenders will look at. Inadequate cash balance is a weakness that so many lenders cannot afford to ignore. As a result, it’s the first thing you can think about before determining whether or not you could even afford a loan. So, before applying for a loan, check your cash flow, especially in COVID’s crisis which plays an important role.

7. Choose the Right Lender

Micro, small, and medium businesses now have the benefit of selecting a financier from a variety of alternatives. However, the current market’s large number of lending firms also presents an option dilemma, which can potentially confuse business owners.

Towards that point, business owners must examine the interest rate, terms and policies, eligibility requirements, and EMI volume offered by their lender as in today’s time, more than 80% of loans are rejected by financial institutions due to no credit history or collateral. So, here, FlexiLoans comes into the picture, an online lending platform that helps you get the money you need for your business without any hassle and less paperwork.

8. Business credit cards

With the advent of start-up businesses in recent years, credit cards for commercial purposes have increased. Unless the start-up doesn’t need the huge sums of money in the early stages of operation, you can use credit cards for purchases and repay the balance on time to reduce bankruptcy or penalty interest rates. 

Final Words

As a small businessman, you may frequently find yourself curious about the best possible way to finance a specific business need, particularly in COVID-19 environment. Don’t worry because FlexiLoans is your new saviour. You can now quickly get a business loan, given that you meet all the desired criteria. If you plan to expand soon, you’ll almost certainly require outside funding. You will be unable to take advantage of business prospects if you stay without external financing for an extended period.