For over 10 years, Community Business Finance's mission is to help businesses realize their dreams. Since 2005, we have approved more than 200 loans for a total of over $150,000,000, giving our loan experts the experience and knowledge to assist you with the 504 Loan Program and increase your chances of a successful loan process.
We have identified three mistakes that borrowers make during the application process and offer a few tips to help you avoid them.
1. Not reviewing your personal credit score
Did you know that your personal credit score matters even if you are seeking a business loan? Every individual that is a personal guarantor on a 504 loan must submit his or her personal financials to assess the perceived level of risk for the lender. This assessment includes personal credit scores. You should review your credit report to make sure there are no surprises.
It takes time to clear up any problems, so the time to start is before you apply for financing. You don't want to lose a loan because you have a credit problem that is easily fixed, and you don't want to wait on financing because you are waiting on credit agencies to update your credit report. If you are confused about the difference between a credit score and a credit report, you can learn more on our blog.
2. Insufficient capacity
Capacity, or cash flow, refers to a company's ability to have enough cash to cover short-term operations, pay suppliers and service debt. A business's profit and loss statement can look completely in the black, but until the payments are received for goods sold, there is no inflow of actual cash. This is why profit and loss statements don't tell the story of a company's capacity.
A company cannot operate for very long without a positive cash flow, and it is usually the first thing lenders look at when gauging the health of a business. To prevent a sudden problem, business owners should calculate cash flow at least quarterly. Regular reviews allow owners to optimize their cash flow before applying for a business loan. Learn more about why capacity matters to the 504 Loan Program.
3. No solid plan for the future
People may love spontaneity in their friends, but in the finance world a well-defined plan for the future is much more desirable. Among other things, a business plan allows you to explain your funding requirements, how the expenditure will impact your business, and your strategies for repaying the loan.
This is critical information for lenders. They want assurance that you will be responsible with the loan proceeds and have a plan to pay them back. Community Business Finance has outlined the components of a solid business plan in our 504 School.
Ready to tell us about your business dream? Get started by filling out a short online form and a loan expert will contact you.
You can also contact our offices:
In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at email@example.com.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017, or email her at firstname.lastname@example.org.