What happened after your Small Business Financing got approved?

Congratulations on successfully obtaining small business financing! You can now confidently move forward, knowing the funding you've worked so hard to obtain is finally within your grasp. However, what happens next?

Receiving financing for your small business is a new phase in your entrepreneurial journey. You might be wondering about the next steps or what to expect after approval. It's essential to understand that managing the funds you've received is a significant responsibility that requires careful planning and execution.

In this blog, we'll explore what you can expect after obtaining small business financing. Let's dive deeper.

Prepare For Closing

As an entrepreneur, obtaining small business financing is a significant milestone that requires considerable effort and dedication. Keep in mind that closing is the last step necessary to obtain the funds you need to bring your vision to life.

Closing is a crucial process where the final loan documents are signed and small business loans in VA are funded. This typically occurs after the lender has approved the loan and the borrower has met all underwriting criteria. It's essential to work closely with your banker to prepare for the closing process, as it involves various steps and requirements depending on the loan type you are taking out.

This is the perfect opportunity to address any lingering concerns and ensure that you completely understand the loan terms and conditions. By adequately preparing for the closing, you can easily make the process smoother and move on to the next phase of your entrepreneurial journey.

Getting Your Funds

Once you've signed the loan documents, you can expect to receive your funds shortly thereafter. After completing all the necessary steps for closing and providing your banker with any required information, a closing date will be scheduled.

The method of receiving your money varies depending on the kind of loan you've taken out. If you've applied for a real estate loan, the funds will typically be distributed to the title company. Alternatively, you may receive your funds by having them directly deposited or wired into an account, and your banker can help you decide which option is best for your situation.

Payments

Now that you have your small business loans in VA, you may be wondering how payments work. Let's take a closer look.

For term loans, principal and interest are due in regular payments, typically on a monthly basis. A principal payment goes towards the repayment of the original amount borrowed, while interest is the fee charged for borrowing the funds.

For line-of-credit loans, interest-only payments are required on the outstanding principal balance. The outstanding principal balance is the amount of money you have borrowed against the line of credit.

For construction loans, the payment structure is usually set up as interest-only payments during construction and then converted to principal and interest payments for a set period.

You have a few different options for making payments. You can choose to have the payments automatically withdrawn from your NBC account or an account at another financial institution. Alternatively, you can receive monthly statements for your loan and make payments manually via check, cash, or transfer from another account.

Annual Maintenance of a Business Loan

After securing small business loans in VA, it is important to remember that the responsibility of maintaining the loan continues beyond the closing process. As per your loan agreement, annual financial statements may be required for both the borrower and guarantor(s) - usually the business owner(s). The guarantor(s) serve as a safeguard if the borrower cannot fulfill their loan obligations.

You may also need to provide interim financial statements such as profit and loss statements or balance sheets to help the bank complete an annual review of your loan. This review assists the bank in determining the financial status of your business. Your banker will provide information regarding these requirements, which will be included in the business loan agreement and guarantee documents signed at loan closing. Apart from providing financial statements, it is also important to keep property taxes (if applicable) and insurance up to date to avoid any potential issues down the line.

Conclusion

In conclusion, obtaining small business financing is an exciting achievement that can help take your entrepreneurial dreams to the next level. Managing your finances is a crucial responsibility that demands meticulous planning and execution. It is imperative to remember this as you go about your financial affairs. By adequately preparing for closing, understanding the payment structure, and fulfilling annual maintenance obligations, you can ensure the long-term success of your business. If you need any assistance or are considering small business loans in VA, contact 504 Capital today. Our Certified Development team of professionals is committed to supporting small business owners in the VA, MD, and NC areas in their growth and evolution. Let us assist you in turning your vision into a reality!

FAQ

• What happens after my small business financing gets approved?

After your small business financing gets approved, the lender will send you the funds. You can utilize the funds for business purposes like purchasing equipment, employing staff, or broadening your services.

• Can I use the small business loans in VA for any purpose?

Generally, you can use the small business loans in VA for business-related purposes, such as purchasing inventory, refinancing existing debt, or covering operating expenses. You should seek clarification from your lender regarding any restrictions or guidelines you should be mindful of.

• What happens if I can't make my small business loan payments?

If you cannot pay for your small business loan, contacting your lender as soon as possible is highly recommended. Depending on the lender and the loan agreement, they may provide solutions such as loan forbearance or a payment plan.

• How can I improve my chances of getting approved for small business financing? 

To improve your possibilities of getting approved for small business financing, you should make sure that your business has a solid credit history, a strong business plan, and sufficient collateral (if applicable). You should also shop around and compare offers from multiple lenders to find the best financing options for your business.