Below, we provide answers to some of the most frequently asked questions pertaining to funding a small business. If you have a question that you don’t see listed here, contact us or call at 919.624.1124.
Q: How good does my credit have to be to purchase a small business? Does it matter?
A: Yes, your credit score matters. Most institutions want to see that there are no negative marks on your credit report. You should be current on all of your debt, and will look at credit reports from the last couple of years.
Q: If I have declared bankruptcy in the past am I still eligible to apply for funding for a small business?
A: Yes. However, your bankruptcy must be at least 7 years old, which may vary depending on the type of loan you are seeking.
Q: If I don’t have any money to put down on a business, can I still get a loan?
A: Not likely. If you do not have a minimum of 10% of the purchase price liquid in non-borrowed funds it will be difficult if not impossible to qualify.
Q: What is considered collateral during when applying for a small business loan?
A: The most popular form of collateral is real estate. For example, if you are a homeowner, you may use your home as collateral. Other examples of collateral include: cash, CD’s, cars, business assets, inventory, and more.
Q: Can I still qualify for a small business loan if I don’t have any collateral?
A: Yes. However, you should always speak to your lender first. Certain loans may not require any collateral. Others may require a co-signer.
Q: If I have no experience in the industry, can I still qualify for a loan?
A: Usually not. One of the SBA guidelines is industry experience. Most loans require that you have at least some experience in the industry. Others allow you to proceed as long as you’ve identified a manager to work in your business who has the required amount of industry-related experience.
Q: Is a business plan required prior to applying for a small business loan?
Q: How long does it take to get funding for a small business?
A: Approval times may vary depending on the competency of the lender and how responsive you and your advisors are to document requests. Generally, 60-90 days but, the process can take 120+ days.