One of the most important things to secure when starting or running a business is financing. However, since the great recession in the early 2000s, qualifying for a bank loan has been increasingly challenging for business owners, regardless of size.
Banks have modified their policies and posted stringent criteria for their clients to follow. For this reason, many entrepreneurs often turn to alternative online lenders who give fast approval to business loan applications.
Taking out a loan in larger amounts can take a few days before it can be approved. If you need cash for your business, waiting a few days can hurt your cash flow even more. While there’s no sure way of saying when your loan application will be approved, here are a few steps you can take that will speed up the process:
1. Consider Online Lenders
Online lenders have a 62% approval rate, which when compared to bank approval rates, is much higher. Considering that fact, it shows that entrepreneurs have higher rates of loan approvals when they apply with online lenders. This is partly because online lenders need minimal documentation for your application process.
Bank applications, on the other hand, may require their borrowers to present a variety of documents. They first need to verify the business’ and the owner’s creditworthiness. This gives them an assurance that the client can meet monthly payments and pay off the loan over the agreed period. Other than that, banks also have to process your collateral, which is a requirement an online lender generally doesn’t ask for.
2. Create a Link for Your Bank Account
Open banking is the process of allowing a third-party to gain access to your accounts with the use of technology. By doing this, you can create links to your bank statements that you can attach when you’re applying for loans online. This will make the application process easier, and faster since you won’t have to email your statements separately.
By linking your bank account statements, the lenders can easily view the documents and compile the data they need. From there, they can assess the current financial health of your business and decide whether you qualify or not. With a bank statement ready for viewing, loan applications are approved faster.
If you’re worried about the safety of the situation, know that third-party platforms have implemented strict security measures. This ensures details clients submit won’t be shown or used by people other than the owners.
In addition to streamlining your financial documentation, enhancing your communication capabilities with a virtual receptionist can further improve your business’s efficiency and response time, ensuring you’re always ready to interact swiftly and professionally with lenders.
3. Provide Accurate and Updated Information
One of the main reasons why many loan applications usually take a long time to be processed is either because of incorrect, or a lack of information. Banks and other lending corporations have seen this situation happen over and over again with their clients.
Some businesses omit liens, financial responsibilities, bankruptcies, and other financial information which they think may lower their chances of getting approved. Other than that, people who claim to own a business and apply for a loan on behalf of the actual owner, is also a common issue that leads to delays.
It’s always important you provide truthful and complete details when you’re filling out your loan application form. Skip one section of information, and it could result in additional waiting time.
4. Respond Quickly
Banks and other lending companies often need to verify the information you have provided in your application. If they have more questions or need more details, they will need to contact you. That is why, as much as possible, you need to quickly respond to their calls or emails.
Furthermore, online lenders will also let you know of the approval of your loan through a phone call. Typically, once your loan is approved, they will ask for your bank account details so they can transfer the funds to it. Essentially, the faster you can provide the details, the sooner you’ll get the funding your business needs.
5. Provide All the Needed Documents
Entrepreneurs should always be ready and proactive when it comes to loan applications. Before applying, it helps to go to the lending company you’re planning to apply to and ask what documents you will need to present.
Once you have that information, start making calls to obtain the necessary documents. Have everything prepared so you can hand in the documents needed when the lending company’s financial manager asks for them.
To give you a heads-up, here are the most common documents lenders usually ask for from borrowers:
- Business Permits
- Business License
- Tax Returns
- Business Plan
- Personal Bank Account Statements
- Business Bank Account Statements
- Business Proposal
- Balance Sheets
- Identification
- Business Lease
Keep These in Mind and Increase Your Chances of a Fast Business Loan Approval
Having adequate working capital is the key to keeping your business up and running in the long term. That’s why it’s always helpful to have inside information when looking for a fast approval for business loans.
While these things may be simple, they can go a long way in speeding up the approval process. Remember, the faster you can get additional funding, the better it will be for the health of your business cash flow.
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