Small Business Loans
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Why should you get a business Loan?
As businesses, we need money to keep the ball rolling. Business capital is used for many things in any industry, such as paying bills, compensating employees, expanding the business, or acquiring more inventory.
As business owners, we have to wear many hats to ensure success, but we don’t need to be the bank. Regardless of the size of your business, there is plenty of money that can help you grow or expand.
When applying for a small business loan, you can receive funding anywhere from $5k to $5 million, depending on your qualifications. As with any other loan product business loans will come with an interest that is attached to the loan and there will be some criteria business owners will need to meet to qualify. But due to the large pool of lenders, the qualification is pretty slim helping many business owners succeed in their financial journey.
Small business loans are designed to provide capital for businesses of any size, helping them keep their doors open. There are many things you can use a business loan for, such as:
Starting a brand new business: Many of us don’t have the money laying around to start a business from scratch, but the good news is we don’t have to. With small business loans, you are able to finally be your own boss with the help of lenders who believe in small business owners.
Expanding current business: To grow as a business you need capital to either acquire more products to sell or maybe get a bigger location to store the items. With business loans, you are able to acquire the necessary funds to help you grow.
Get cash flow: Even experienced or large business owners will experience the slow seasons that they were prepared for. With a business loan, you are able to ride the wave helping you cover expenses until your business is improved.
Large purchases: Not all industries but some small businesses will require large purchases such as machinery to help them speed up their manufacturing process. This in return will help the business make the products at a lower cost and with a business loan, you don’t have to waste years of savings to acquire that.
Other Expenses: Each industry is different and will come with its own challenges. Business loans can help do almost anything like acquiring other businesses, buying out partners, improving your business credit, and getting more inventory. No matter what it is our lender partners want to help you.
What's required to get funded for a business loan?
Each lender will have their own requirement but here are the typical things we see that increase businesses’ approval rates.
1 year in business
At least $10,000 in revenue
500 and up Credit Score
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What type of business loans are there?
There are many business loan options that can range from government funding all the way to private funding. The main business loan out there will be SBA Loans (Small Business Administration Loans), merchant cash advance loans, Equipment financing, Business line of credit, Invoice Financing, and more.
It is important to understand that the loan terms and amount may vary depending on the lender and your business financials.
Small Business Administrations Loans (SBA): SBA loans will be a loan that the U.S. Small business administration guarantees and are available for small businesses that meet certain requirements.
Businesses are required to be for-profit, located in the US, and have exhausted other financial options. SBA loans are considered to be more difficult to qualify for due to their lower interest rates and better terms.
Lenders may require a 640 credit score, $100k or more in revenue, and at least two years in business.
These loans are backed by the government helping lenders eliminate the risk of not getting paid back and in return, the lender offers more favorable terms to the borrowers. Small Business Administration Loans can be used for things such as real estate purchases, equipment, and anything to do with the business.
Cash advance Loans: These will be a type of short-term loan that is offered by alternative lenders. This loan is like a line of credit that is withdrawn against their credit card, line of credit, or in exchange for their future sale.
Cash advance Loans will usually be a higher interest rate and more fees. Cash advance loans are usually smaller amounts and are usually used by businesses for emergencies helping them keep their doors open.
Business Line of Credit Loans: This is a flexible financing option that lets most businesses access a certain amount of funds from the lender.
Just like a regular credit line, you get an amount depending on what you’re approved for and you are able to borrow and return the money as you please with interest. Credit limits will usually be lower credit scores and may require a personal guarantee from the business owner.
The downside of a business line of credit loan is you will pay a fee every time you take the money amount making it more expensive than something like an SBA loan. Business
Like credit loans can be used for anything such as expenses, funding capital, or any other fees associated with the business. It’s a good option if your business needs a seasonal increase in cash to cover expenses.
Term Loans For Businesses: Like traditional personal loans, the business owner will receive a lump sum of money which is repaid over time with fixed terms.
Business owners use these types of loans in most cases for large acquisitions like machinery, property, business, and such. Terms Loans will be more long term usually ranging from 1-10 years.
To determine these loans lenders will consider things such as creditworthiness, financial history, and what the loan will be used for. You are able to receive this type of loan from lenders, banks, and credit unions, and is a good tool for businesses to utilize to help them expand.
Other Financing options: As a business owner there are many other avenues you are able to take to get some funding for your business such as borrowing from friends, family, private investors, savings, home equity loans or even selling your expensive toys. In some cases as business owners, we need to take some sacrifices to have a brighter future.
Steps to get a business loan.
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Steps to get a business loan.
Step 1 Determine What the loan will be used for.
Before applying for a loan be sure to figure out what the loan will be used form this will help you determine which loan you should be able to take.
Step 2 Check your credit.
Just like any loan product, you will need to have a credit history to get approved. Typically business loans require a 500 credit score to get approved but the higher your score the better the rates you will receive.
Step 3 Compare Lender.
Research all the lenders available to you helping you choose the right loan for your business. Also, be sure to see if you qualify for any government grants helping you acquire loans at record-low rates.
Step 4 Apply for the loan.
Once you have selected the lender be sure you have all the documentation in place to submit your application and proceed by filling out your loan application.
Step 5 receive funds.
After you have received the approval back from the lender its type to accept it and receive your funds to use for your business ventures.
Frequently asked questions (FAQ)
How much money can I get?
The amount you will receive from the lender will depend on your business financial but typically business loans can be anywhere from $5,000- $5,000,000.
Do I have to personally guarantee the loan?
A lot of small business loans will require you to personally guarantee the loan which means you can be held responsible if the fails. But each lender has their own policy be sure to check with the lender your applying with.
How much does my business have to make?
Business loans are catered for any size business as long as your income is more than $10,000 you are able to receive funding for your business. But the amount you can receive will vary on the size of your business.
Can I get a loan to start a business?
Yes, there are loan products that will help you get a loan to buy a business. But usually, they will require you to have some experience and to personally guarantee the loan.
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