February 4, 2019 | Mason Roberts

Applying for a small business loan may be a more complex process than a new entrepreneur may initially think. It's more than just picking the right lender, it is also about picking the right time to apply for one, to ensure you get the best loan possible. The difference between a small loan given from, say, November, as opposed to one given in January, can be outrageous. It can affect the changes that you, as a small business owner, want to take for your business to grow.

Many lenders actually advise that the best time to apply for a business loan is when you think you don’t really need it. Why is this? Because things change at the snap of your fingers. If your revenue is high and you have the means to pay the loan back, why not be prepared for the unexpected? There are hundreds of small businesses a year that go under that were doing very well, once upon a time. If your business is doing well and bringing in a large sum of money, chances are you will also be given a great loan at a great rate because your lender is sure you can be trusted when it comes to payment due dates. In this kind of situation, when everything is going well in your small business, try to consider the best way to make sure it stays that way. A small business loan for the right amount, at the right rate, at the right time could make the difference between a sophomore slump and getting voted most likely to succeed! So, what do you need to take your successful small business to the next level? Here are the top aspects to consider when taking out a small business loan.

Worst Month, Low Acceptance Rate

Many business owners choose to ignore the fact that they may need some financial help later down the road, and end up applying for a loan too late in the year. This could mean their business and personal finances suffer from the crippling interest rates that result. NerdWallet, largest online person-to-person lender, researched small business loans in-depth, and after examining the subject for some years, they determined that December is the worst month when it comes to applying for a loan. This is because of some uncompromisable factors. The last month of the year is also the worst time of year to apply for a small business loan because it has a very low acceptance rate. Not only do you face a low acceptance rate, but if you do happen to be approved for a small business loan, it's almost not even worth it because the interest rates are incredibly high. It's the month with the highest interest rates of all the others throughout the year. If you are an aspiring entrepreneur who believes they may need a business loan come December, the best thing to do is be realistic about your business needs and apply for the loan a couple of months earlier.

Best Month, Lowest Interest Rate

Just like there's a worst month for a loan, NerdWallet's research also revealed the best month for your small business loan. Upon analysis, it was determined that the best month to apply for a business loan is November. In November, there is a high acceptance rate all month long. A November loan also has a low-risk premium and a low interest rate. Lenders are most likely to give you the most money, while saving you the most. That makes November a good time for all business owners to get a loan. As a small business owner, it's important for you to be thinking about factors like this, and weighing your options to determine the most vital for your long-term success. If you're prepared (especially financially) for every possible outcome that may come your way, your business is in good and capable hands.

Why Are There So Many Small Business Loan Request in December?

When it comes to the taking out a small business loan strictly for your business alone, it is unclear why entrepreneurs are in such a money crunch, come December. There can be many different reasons, personal, business, or otherwise. One theory is that this is based on business owners' rush to keep their inventory well-stocked for the holidays. If a business takes inventory in October, the payments for suppliers can very well be in December. If the business owner is already struggling with meeting their revenue and inventory needs, finding a way to pay these costs may find them in a position where they turn to a small business loan to help solve their problems. If this happens all over, every year, that will turn into a lot of loan requests, which in turn results in a lower number of acceptance rates. Now, this is not the only reason that December is bursting with small business loan applicants, so it's hard to determine why every applicant is in need of one. With all of this considered, however, it's hard for lenders to say yes to every business owner in need of that extra funding. When it comes to applying for a small business loan, the rates come hand-in-hand with many other factors, one of the biggest being the demand there is at time of the year you're applying for one.

Things Are Looking Up in the New Year!

While December is the worst time of the year to apply for a small business loan, the new year tends to look up when it comes to applying for a loan. Lenders tend to be more lenient by the time the new year rolls around; this is said to happen for one main reason. December is a financially tight money for hundreds of thousands of people all over the world. With the holidays upon us and the new year just around the corner, many people find themselves looking to a small loan for help, whether they're soccer moms or small business owners. Loans are so frequently requested that lender simply can't just accommodate everyone. Lenders also tend to be weary of those applying for a loan in December, because the chances of untrustworthy people requesting them tend to be higher as the rate of loan requests grows immensely. The overall rates from December to January, whether they be acceptance rates, interest rates, or low-risk premiums, all improve by the time the new year arrives. If you are considering applying for a loan in December, your best bet as a business owner may be to try and move some money around and consider holding off on applying for a loan until you hit the new year. That's one smart way to start the new year off right!

Be Aware

Though your business is small, the process of owning, operating, and having capital for your business is still complex. If you think your business is doing well and you will never need a small business loan, look into your finances again. And again. Be sure that this is something that you're really certain about. If you've found yourself in an unexpected crunch towards December of last year or the year before, you may already know that it could be harder to get the small business loan you're in desperate need of at a rate you can comfortably afford. Take into account all of the possible outcomes your business can endure, and make a truly informed decision from there. You'll be glad you did!