The way small businesses borrow money is being completely transformed by the rise in online lending. Innovators are providing faster and easier ways to borrow and increasing access to credit in communities that have historically been underserved. But this transformation will only achieve its potential if it is built on transparency, fairness, and putting the rights of borrowers at the center of the lending process.
Know your rights as a small business borrower
Preparing for a Small Business Loan: A Checklist
A small business loan can be a powerful tool for growing your business, or just meeting day to day expenses. Deciding that you need a loan may be easy but the real challenge is making sure you're ready to apply for financing.
Before approaching a lender, it pays to make sure you're putting your best foot forward. This checklist serves as a handy guide for getting your business prepped for a loan.
Know Your Debt Service Coverage Ratio
Are you a small business owner ready to seek outside funding? You might think that finding a lender is the initial step. However, there’s an important financial ratio you should understand first. The debt-service coverage ratio (DSCR)helps determine whether or not your business can take on a loan and the size of small business loan you can handle. Additionally, lenders frequently use DSCR as a way to evaluate whether they should lend money to a business. Having a good debt service coverage ratio can be critical to getting low-cost funds for your business.
Does Your Small Business Need a Loan?
There are certain elements that you need to run a successful small business. A solid business plan and determination can take you far, but if you really want to grow, you'll need capital to fund your expansion plans.
If you don't want to drain your cash reserves, a loan may be just what you need to pursue your next phase of growth. Before you can advance your business using a loan, however, you have to be sure that it's the right move.
What can a small business use a loan for?
Exploring alternative funding options: What is a CDFI?
Are you a small business owner looking for alternative funding options beyond a traditional bank loan? A CDFI loan might be the answer you’ve been looking for.
While traditional bank lending is down, organizations called community development financial institutions, or CDFIs, are stepping up to fill the void by focusing on supporting small businesses and local economies in a holistic way. So what is a CDFI?