As a small business, you may not have the same access to working capital as large corporations. It can be difficult to find investors or scrape up enough cash from your personal funds to expand. However, if you want to open a new location or move to a larger store, you need to get access to funding somehow.

So what should you do? Fortunately, there are lots of business financing opportunities. However, many loans for commercial real estate have high standards you have to meet for approval. Before you apply for financing, here are some things you should know about the application process.

Credit Rating

Your credit rating can play a huge role in whether or not you qualify for a loan. A credit score is a number calculated based on how you’ve paid back loans in the past. Lenders use this number to gauge how likely you are to pay back funds you borrow in the future.

A great credit rating not only increases your chances of getting approved but can also lead to better interest rates and other terms. Interest rates are how lenders ensure they make a profit, so if there’s more risk associated with a loan, they may offer higher rates to mitigate that risk.

When it comes to business financing, most lenders are pretty strict on the minimum credit rating they’ll accept. This is true of SBA loans as well, which are guaranteed by the Small Business Administration.

Cash Flow

How much profit is your business able to generate? To pay back a loan, you’ll need to have adequate cash flow. Lenders will likely ask to see your business plan and generated profits over the past two years.

If you’re a startup, you likely won’t have the adequate cash flow to qualify for a business loan. However, you may be able to get a personal loan instead and use those funds to jumpstart your business.

Collateral

Most business financing is secured, which means there’s some kind of guarantee for lenders in case you default. This guarantee is called collateral. You can use many types of assets as collateral, including property, equipment, and vehicles.

Collateral can help you get financing when you otherwise don’t qualify. For example, third parties sometimes offer stated income loans, which rely completely on the value of the collateral to cover the borrowed amount. Collateral can also help you get a more manageable interest rate.