Where should a business owner start when looking to apply for a business loan? Well, that depends on a lot of different things. How’s the health of your business? What is your personal credit score? Do you pay your vendors on time? Do you have a mortgage? Do you plan on putting collateral? Has your business had a loss in the past 3 years? Have you applied a commercial bank or credit union? When do you need the loan? Have you applied through the SBA? These are just a few of the dozens of questions we will ask you when you apply for the business loan. We will also request recent tax returns and 3 months of banking statements. Even if your business is not in need of a loan it’s a good idea to have the capital available in the event you want to hire new people, buy equipment, penetrate new markets and more. When a business goes through tough times it needs cash to stay afloat. If that cash is not available then a business could be put in jeopardy. This is no doubt the main reason small businesses close their doors. It’s not for a lack of demand, quality or anything else. It’s typically because a business loses a big client or the economy slows down. During that period of time a business must have positive cash flow and capital set aside to weather the slow-down in business.
Just like with our other products the important thing is that the process be done efficiently and secure. We take pride in the fact that we only partner with the top lenders . Efficiency is very important as business people are always short on time. There are many types of business loans in the market today. Especially since the hard money lenders and crowd sourcing websites entered the market. However, the most common types of business loans are Long Term, Short Term, Line of Credit & Alternative Financing. Here’s a quick summary of what these loans are usually used for.
Long Term Loan – Business expansion, acquisition, refinancing or working capital
Short Term Loan – build up inventory, cash for accounts payable, or for small projects under $100,000
Line of Credit – You use the funds as needed rather than getting a lump sum. A lot like a credit card. Interest rates can be high, so this option is usually used for an emergency or shortfall.
Alternative Financing – cash advances, leasebacks, peer-to-peer loans and crowd funding to name a few. The amount they lend is usually smaller with a higher interest rate.
So whether you’re looking to invest in the infrastructure of your business, increase inventory or keep operations running there’s no doubt there’s a product for your business. We have helped thousands of small businesses just like yours secure a loan. The main thing is you need to do your research. Call us and spend time studying the information posted on our website. We work with many lenders and they all have products for many different types of businesses. We would also encourage you to compare our product to what’s available locally. Find a local community bank or credit union and talk to the loan officer to get an understanding of how they work. You should also look the SBA Small Business Administration website (sba.gov) to consider that as an alternative. The drawback there is that it’s a lengthy process since these are loans secured by the government.
Once you’ve determined what type of loan you think is right for your business then develop a plan to maximize your chances of securing the financing. Here are some helpful tips on securing financing for your business.
Clearly outline how funds will be used
Provide all financial statements including audits
Understand your credit score and your assets and liabilities
Find out the value of your business
Open communication with the lender
Why get a business loan?
- Start building your future.
- Purchase equipment
- Improve your operations and generate more
- revenue with new equipment
- Hire new employees
- Invest in your employees, your most
- valuable resources
- Consolidate debt
- Move from high interest debt into a simple,
- transparent monthly payment and free up
- cash flow to run your business
- Expand your location
- Give your business the ability to expand to its
- current location or take another one.
- Two years or more in business
- At least $75,000 in annual sales
- No recent bankruptcies or tax liens
- Own at least 20% of your business
- At least fair or better personal credit