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How to Apply for a Small Business Loan

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Running a business requires more than just a great idea; it also requires capital. For many entrepreneurs, securing funding can be a daunting task. The paperwork can appear daunting, and conventional financial institutions can take a long time to process the application.

In addition, it can be difficult to understand what type of loan is best for your business needs. In this guide, we will explain how to apply for a small business loan more easily.

Benefits of Small Business Loans

The benefits of small business loans for companies in need is important. For starters, they provide access to necessary capital. Whether you’re looking to purchase inventory, hire additional staff, or invest in marketing, a small business loan can provide the financial boost you need.

Additionally, small business term loans in Canada often come with competitive interest rates, making them a cost-effective financing option. This allows you to allocate your funds towards other essential areas of your business. Finally, by obtaining a loan, you can build a positive credit history for your business, which can be beneficial when seeking additional financing in the future.

Exploring Capital Options

You’ve probably heard the term “capital” in different contexts. The capital meaning in business terms is as follows: In business, capital refers to the funds invested in a company to generate income and support its operations. When seeking capital for your business, there are various options to consider, including small business loans, investments from partners or investors, and personal savings.

Small business loans are a popular choice for entrepreneurs as they provide a structured and reliable source of capital. In other words, you can access the necessary funds to fuel your business’s growth without diluting ownership or seeking outside investors.

Alternative Financing Options: Merchant Cash Advances, Equipment Financing, and Invoice Factoring

While traditional small business loans and credit cards are common financing options, alternative options may be more suitable for your needs. Let’s look at some other types of loans for a small business in Canada:

  • A merchant cash advance (MCA) provides a lump sum of capital in exchange for a percentage of your future credit card sales. This option is particularly useful for businesses with fluctuating revenue, as the repayment is tied to your sales volume.
  • Equipment financing, as mentioned earlier, allows you to acquire equipment while spreading the cost over time. A business loan for equipment can be a lifeline for a company short on cash flow.
  • Invoice factoring involves selling your outstanding invoices to a third party at a discount, providing you with immediate funds.
  • Canadian business credit cards offer local companies a convenient and flexible way to access capital on an as-needed basis. They provide a revolving line of credit, allowing you to make purchases or cover expenses up to a predetermined credit limit.
  • A small business emergency loan is designed to provide quick access to capital during challenging times. For example, the Canada Emergency Business Account (CEBA) loan helped businesses stay afloat during the COVID-19 pandemic.

How to Apply for a Small Business Loan with Levr.ai

Levr.ai knows that many small business owners feel intimidated when applying for loans. That’s why our team created Levr.ai, an advanced platform that optimizes the application process. Levr.ai uses cutting-edge AI algorithms to match you with the right, certified lenders.

Levr.ai helps to break down barriers making it easy to apply:

  1. Create a free Levr.ai account: When you create your free Levr.ai account, you gain access to tons of great loan options. It’s quick and easy. Simply create your Business profile and let us know a bit about your financial standing and funding goals.
  2. Review your custom matched loans: With the information you share, Levr.ai uses AI and ML to match your funding needs with the most compatible lender for your business and loan type. Based on your matches, Levr.ai prompts you for required documentation for each lender. Taking the guesswork out of what is the right loan for your business, based on your financial growth goals.
  3. Prepare your application and get your loan funded: Levr.ai is built with easy-to-follow guides and templates designed to ensure you’re prepared for loan application success. Once your loan is funded, Levr.ai is a safe and secure platform to stay on top of reporting requirements for your funded loan.

Increase Your Chances of Approval

Determine Your Loan Requirements

Assess your business’s financial needs and determine the specific amount you require. Consider factors such as the purpose of the loan, repayment terms, and interest rates. Please also explore different types of business loans to match with a type of loan most suitable for your business’s needs.

Gather Necessary Documents

Typically, lenders will require financial statements, tax returns, business licenses, and proof of collateral. Prepare these documents to help the application process.

Research And Compare Lenders

It’s a good idea to compare interest rates, repayment terms, and eligibility criteria to find the best fit for your business. However, this process can be complex. Fortunately, Levr.ai does the heavy lifting for you. Our system is powered by Artificial Intelligence and Machine Learning to help connect you with certified lenders. There’s no pressure. You can compare your options at your convenience.

Prepare a Business Plan

A well-crafted business plan is essential when applying for a small business loan. It should outline your business’s goals, strategies, market analysis, and financial projections.

Maintain Accuracy

Complete the loan application accurately and provide all requested information. Be prepared to answer any additional questions or provide further documentation if requested. Errors in your application could delay the process.

Wait For Approval

After submitting your application, you will receive confirmation from the lender that your application was received. They may have follow-up questions. Answer them with supporting documentation for approval.

Checklist: Documents Required

The documents required for a loan application depend on the type of loan. For example, while a small business loan application may require a business credit report, an MCA application will be more dependent on your sales figures.

Here are some common documents you may need:

  1. Business plan: A comprehensive business plan that outlines your business’s mission, goals, financial projections, and marketing strategies.
  2. Financial statements: This includes balance sheets, income statements, and cash flow statements. These documents provide insights into your business’s financial health.
  3. Tax returns: Personal and business tax returns for the past few years. Lenders often review tax returns to assess your business’s profitability and stability.
  4. Proof of collateral: If you’re applying for a secured loan, you may need to provide proof of collateral, such as property deeds or inventory documentation.
  5. Legal documents: Business licenses, permits, contracts, and any other legal documents relevant to your business.
  6. Bank statements: Recent bank statements to demonstrate your business’s cash flow and financial transactions.
  7. Personal identification: Valid identification documents such as passports or driver’s licenses.

Tips for a Successful Small Business Loan Application

  •  A strong credit history is essential when applying for a small business loan. Pay your bills on time, minimize outstanding debts, and review your credit report regularly to address any discrepancies.
  • As mentioned, financial documents like tax returns, financial statements, and bank statements can help. In addition, a well-prepared business plan demonstrates your commitment to your business.
  • Only apply for the amount you need. This will help you build credit and also avoid unnecessary liabilities.
  • Don’t hesitate to seek advice from a financial advisor or business consultant. At Levr.ai, we encourage applicants to apply with their financial advisors if they need to do so.

What Is Levr.ai And How Does It Work?

Levr.ai is a free, intelligent loans platform giving you better access to loan options. The platform is designed to make it easy and fast to get the funding your business needs to thrive and grow.

Using the information you provide, Levr.ai uses artificial intelligence and machine learning to match you with the right loan options and best lenders based on your needs. With the help of guides and templates, you can streamline the creation of your applications in a safe and secure environment.

You are welcome to invite your accountant or business partner for help with the process. You can also reach out to our qualified team members for help through our platform.

With the right loan and a solid business strategy, you can take your business to new heights. Use Levr.ai today to easily apply for a loan and connect with certified lenders.

Still would like more guidance—no problem! Levr.ai has a team of lender experts that can hop on a call based on your schedule. Book your time here. It’s free!

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