By Brooke Chaplan

Small business loans offer small businesses an opportunity to grow. If you’re considering applying for this type of loan, make sure you’re prepared to meet all the requirements and qualifications that lenders look for. Consider the following suggestions:

Build business and personal credit scores

The first step business owners must make when applying for small business loans is to build their credit scores. Both business and personal credit scores play a factor when lenders determine who will qualify for a loan. Business owners who have lower credit scores should focus on improving their credit before applying for a business loan. This way, they’ll be able to get better loans with lower interest rates.

Use installment loans

Not sure where to start building your credit? Many small business owners get an installment loan to improve credit scores. With an installment loan, you’ll be able to raise your credit score if you consistently pay on time, are hoping to boost your credit utilization, and currently only use credit cards. This type of loan will diversify your credit types, which will help to boost your score.

Understand your lender’s qualifications and requirements

In addition to building a better credit score, it’s important that you carefully review all the lenders’ qualifications and requirements. Many lenders offer flexibility for applicants that may not meet certain requirements, but you’re more likely to get approved if you exceed a lender’s minimum qualifications. Minimum requirements like the annual revenue amount, credit score, and the years you’ve been in business are what you’ll likely need to focus on when applying for a small business loan. Additionally, many qualifications also specify that borrowers haven’t had any past delinquencies or bankruptcies.

Provide legal and financial documents

If you’re ready to apply for a small business loan, make sure you have the proper documents that lenders request. Banks and similar lenders often ask for a variety of legal and financial documents before approving an application. These types of documents include tax returns, business licenses, commercial leases, a driver’s license photo, business and personal bank statements, an income statement and balance sheet, articles of incorporation, and similar documents.

While small business loans vary by lender, many of the qualifications and requirements for the application process remain the same. Keep these tips in mind as you prepare to apply for a small business loan.

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Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan.