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How Small Business Loan Decisions Are Made At Royal

Small business owner with an open sign

Just like businesses, business loan requests come in all shapes and sizes! As you might expect, things work differently for small business loans compared to larger commercial loans. This article shares information about how small business loan decisions are made at Royal Credit Union. The information provided here is meant to help potential small business loan borrowers understand Royal’s small business loan process.

Liquidity, Collateral & Statements

As you might expect, Royal considers your existing assets when making a small business loan decision. We’re looking to see if you have an established savings pool for your business to use in addition to any funds you’re requesting to borrow. Having adequate cash savings can demonstrate that you’re willing to invest in your business and that you’re in a position to deal with any short-term challenges.

Besides liquid cash funds, we’ll review any other collateral your business might have. Business collateral could be things like business equipment, vehicles, real estate, or other property that we can use to back your loan.

For an established business, Royal will request documentation of your business cash flow. Your income statements and other financial documents will be used to determine if your income supports your requested loan amount.

Personal Credit Scores Are Important

Maintaining a healthy personal credit score is important for many reasons, but you may not know that a strong personal credit score can also help you qualify for a small business loan. Royal reviews personal credit scores when making all business loan decisions.

A borrower’s personal credit score can be a good indicator of how they manage their finances. If a business loan applicant has a high personal credit score, it means they pay their bills on time and use credit or loans responsibly, so they are likely to handle business bookkeeping the same way.

Share Your Business Plans

A business plan is a great way to set your business up for success, and it might be the key to getting your loan application approved. If you have a newer business, you probably won’t have the income statements or collateral that we would normally review from an established business. Our team loves learning about all kinds of business ideas and hearing your plans for success. When you share insights into your competitive advantage and present a vision of your business’s future through your business plan, we can often take those factors into account when considering your small business loan application.

Banking Relationships Matter

One important aspect of a business loan request is your financial relationship with Royal. If you have banking history with us and we can confirm that you’re able to successfully manage your accounts, cash on hand, and business credit card or line of credit balances, we can take that into account when reviewing your business loan request.

As a starting point, we recommend opening your business savings and operating accounts with Royal to establish your financial history. A business Kwik Cash line of credit and business credit card can help increase your spending power and protect you from unexpected overdrafts while you demonstrate responsible business credit use. These introductory business borrowing options typically have less stringent qualifying requirements compared to a traditional business loan.

A Personal Touch & Expert Advice

Every business loan application is reviewed by a Royal team member. Your small business loan application at Royal Credit Union is evaluated by a real person, and a decision is made based on your overall business situation and needs.

This personal, human touch is one of the ways that Royal’s small business lending process is different than other financials. Submitting a business loan application to Royal means starting a conversation with Royal’s business loan experts. Our team is here to answer your questions and keep you informed every step of the way. Even if we’re not able to approve your loan request, you can count on our team to provide our best advice and offer honest insights into possible next steps.

We’re also happy to talk with you before you even submit a small business loan application – just reach out to one of our business banking officers with your questions about the process. Royal can help businesses of all sizes with their financial needs. We’re proud to be a trusted financial partner for business owners whether they have an established business, a startup company, or even just an idea!

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