How to Use QuickBooks to Get a Small Business Loan

Use QuickBooks to secure financing.

It's no surprise that QuickBooks is the crème de la crème of business accounting software, having expanded and improved its capabilities over the last four decades.

While QuickBooks is known primarily to help small businesses with accounting, it can perform many additional tasks that benefit independent businesses immensely. One of the many features is the ability to streamline financing for small and medium-sized enterprises.

This guide will help business owners in Canada understand how to use the software to apply for business loans and how this type of financing works.

Why Should You Get a Business Loan?

There are various reasons why a small, medium, or even large-scale enterprise may need to borrow money. Every business, no matter how big or small, will have specific reasons and circumstances for borrowing capital.

However, businesses tend to face (and overcome) similar roadblocks. Below, you'll find three common reasons small and medium-sized businesses apply for loans.

Access to Capital

The old adage "you have to spend money to make money" sounds too familiar to small business owners. However, the reality is that capital isn't always accessible for many businesses. That's where a loan can come in handy.

With a business loan, businesses can gain access to capital and address a variety of expenses, such as start-up costs, operational costs, repairs, managing cash flow, upgrading, hiring, expanding, and purchasing inventory, among many other reasons.

Getting a loan can also help address emergencies or cash flow gaps if you do not have an emergency fund or are having a bad month.

Building Credit History

Financial institutions will examine your credit history when they issue commercial credit to businesses.

Financial institutions provide SMEs with capital at a rate that corresponds with their creditworthiness. Companies then access the funds to help meet their financial obligations.

Building strong credit is essential for businesses, as it creates a good rapport with lenders and financial institutions.

Applying for and receiving a loan can help establish and build a credit history. Those with an established credit history can build upon and improve their credit if the borrower makes all of their bill and loan payments on time. 

Debt Consolidation

If your business has outstanding debts, debt consolidation might be a viable reason to apply for a loan.

Keeping track of various debts, repayment terms, and interest rates can become overwhelming in addition to personal finances.

A business loan can aggregate outstanding debts into one monthly payment.

How to Get a Business Loan in 4 Easy Steps

Getting a small business loan can be a timely and stressful process. But, if you follow every step below and prepare accordingly, you'll make the process much more manageable and with a successful outcome.

1. Understand why you need financing

It can't be stressed enough: every business will have its reasons for borrowing. There's no one-size-fits-all approach to business financing, and knowing this beforehand can save you time, money, and frustration.

An excellent way to understand if a business loan is right for you depends on how long you plan to keep the loan open.

The best way to determine this is by understanding the difference between long-term and short-term loans.

Financing needs under one or two years are considered short-term, while those exceeding are considered long-term.

If your expenses are minor or ongoing, you might find more significant benefits from business credit cards or business lines of credit.

2. Prepare the Required Documents

Banks and alternative lenders alike will require various documents from potential customers, depending on the type of loan. Other types of loans will require you to provide specific documents, so be sure to have access to those documents.

Loan requirements vary by lender and type. However, commonalities in the requirements bear a resemblance to other credit products. The most common loan requirements for small businesses can include the following:

• Business Registration: Your business must be registered with the Government of Canada or the Province of Quebec, depending on your location. 

• Business Bank Account: An open bank account in your business's name.

• Business and Personal Credit History: Your personal credit score and business credit report will be considered when applying for a loan and should be in good standing. 

• Company Financial Statements or Tax Returns: Many lenders and loan providers will ask to see financial statements from the past two years, or, instead of financial statements, a tax return may be in order. 

• Project Description: Many lenders will want to know why you need the loan and how you plan to repay it. A project description can be one page long but should contain detailed specifics.

3. Compare Options Based on Your Qualifications

Once you've got your documents in order and understand the type of financing you're looking for, it's time to compare options based on your qualifications.

Qualification requirements, as well as loan features, will impact your financing experience immensely. Minimum credit score, minimum revenue, and business age will all impact whether or not you will receive a loan.

If you apply for a loan that you are not qualified for, you will likely be declined and may even see a negative impact on your business credit score.

4. Submit Your Application

Found a business loan that meets your qualifications and needs? It's time to submit your application and wait for a reply from the lender. 

How Long Does It Take to Get a Business Loan?

Several factors vary the answer to this question. It can take anywhere from a few days to a few weeks to get a business loan, depending on the type of loan and the lender issuing the financing.

Traditional banks tend to take longer when financing businesses, as banks tend to have stricter requirements for business owners applying for financing. They may also require more requirements and documents. There may also be an in-person interview required with a loan manager.

There are alternative lenders available as well, who typically have easier requirements when applying for business credit products. Generally, these lenders are ideal for newer businesses that aren't as established. Rates can tend to be higher, and loan amounts can be smaller. However, they're an excellent option for new businesses.

2 Ways to Get Small Business Loans

QuickBooks can help small businesses apply for business loans in two ways through QuickBooks Capital and QuickBooks Apps.

QuickBooks Capital

In 2017, QuickBooks introduced QuickBooks Capital, which allows small businesses to apply for loans up to $150,000.

QuickBooks members can see offers and rates with the details they provide about the overall health of their business.

Using your Intuit account, QuickBooks members can apply for a loan directly through the software and compare rates depending on their qualification status, determined by an algorithm and user data.

QuickBooks Capital is certainly an innovative feature of accounting software. However, your journey for business financing should not end here. QuickBooks Capital only offers one loan based on your criteria, meaning you should compare options from other providers before you commit. You don't want to get stuck with a higher-than-necessary interest rate, which can become quite costly if your loan lasts longer than a few months or years. 

Another caveat to QuickBooks Capital is that it can only provide financing options to a certain amount of $150,000. 

While the average SME borrows approximately $55,000 when applying for a loan, this option may be restrictive if you require more financing.

Third-Party QuickBooks Apps

There are hundreds of apps and plugins available to QuickBooks customers, all providing different ways to enhance what QuickBooks can do for small businesses.

From taking bill payments to signing documents virtually, there are a lot of QuickBooks apps available and some of them can help improve your journey to receiving financing for your business.

Use Cubeler to Streamline the Loan Application Process

One of these apps is Cubeler, a business ecosystem that utilizes your QuickBooks account to match your SME with multiple pre-qualified borrowing offers from various banks, credit unions, and other financial institutions according to your loan qualification criteria.

To access tailored loan offers, you must register your business on the Cubeler Business Hub™, a no-cost platform exclusive to small and medium-sized businesses.

Activating Cubeler-Link™ with your QuickBooks account will allow you to browse and compare custom financing options and apply directly to the financial institution of your choice.

Cubeler eliminates the lengthy wait times and bureaucratic approach that traditionally comes with applying for financing, allowing you to secure financing faster without impacting your business credit scores. Open an account with Cubeler today and get started.

Connect QuickBooks to Cubeler and get fast-track access to multiple prequalified loan offers

Sign up now with Cubeler, connect your QuickBooks account and, in minutes, take your pick of multiple loan offers tailored to your business—without damaging your credit score.

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