What Business Loan Can I Get?
If you’re starting a new business, or have an established business, a small business loan could help you explode your growth and earnings by providing you with the financial wherewithal to either establish or grow a business, acquire inventory, or simply advertise your small business.
So how does a small business loan benefit you in real terms? And do you qualify for financing?
What Small Business Loans Are Available?
Small Business Loans are a lot like shoes. They come in a bunch of styles, colors and sizes. One common type of business loan is the commercial real estate loan. The commercial real estate loans is typically for those that either own a commercial piece of property as owner occupied or look to acquire commercial property for investment purposes. While there are tremendous benefits to this type of loan it will not typically help the small business owner with day to day operations.
There is also a business credit line (also known as a business line of credit), which is a fixed, pre-determined amount of credit (money made available to you) that a company could draw from as demands take place. This is traditionally referred to as “working capital” and can be both secured or unsecured.
A small business loan is a certain amount of money that is borrowed by a business that desires to start or run his/her business. There are a variety of small business loans offered by the government (SBA loans), banks (bank small business loans), or alternative small business lenders. Again, these may be secured or unsecured.
Unsecured small business loans are typically offered by an alternative lender (and not a bank) based on your current company’s cash flow and to a lesser degree your personal credit score (FICO scores of 550 or better with exceptions to go as low as 500).
The lender’s protection is your cash flow or cash receivables. On the other hand, if you are willing to “secure” the loan or personally guarantee the small business loan, you will be offered better rates and terms. However, your lender will certainly need to see a decent credit score (FICO score of 640 or better) as well as a clean credit history along with a steady and stable cash flow.
Are Business Loans a Good Idea?
Getting a small business loan for your new or existing business could bring relief in many ways. A small business loan permits you to grow and expand your business without the financial stress of having too much month at the end of the money. Maybe you need money for payroll or taxes. Do you need to renovate, buy more equipment or inventory? What if the competitor right above or below you were to go out of business. Maybe you’d like to purchase their assets or customers. The uses for working capital are only limited by your imagination.
What is Business Loan Underwriting?
Next, ask the lender directly about any concerns you have regarding the firm’s lending qualifications. This could eliminate any kind of worries in your mind before beginning the process. You have to think of exactly how your business will use the small business loan. It’s best to understand this before you begin the process. Make sure that you know what’s on your personal (and even business credit) report before you start. Your credit record score will certainly take a small hit if you have countless credit inquiries from lending companies, which could reduce your credit score for the future (inquiries will fall off after 6 months). Just know that the “inquiries” only make up ten percent of your total score. The bottom line is that this has the least impact to your overall score.
Make certain your repayment of any outstanding personal or business loans, mortgages and rents, credit cards, invoices, payables, etc., have in fact been made in a timely manner over the previous 2 years or even more. The nice thing about using an alternative small business loan lender, they are far more forgiving and will understand any blemishes you have, including a limited number of monthly bounced checks or NSF’s.
Small business loan companies base your approval typically on over 100 to 900 different metrics and not just your specific credit score, especially if you are getting an unsecured small business loan.
Where to Get Small Business Loan
Obtaining a small business loan for your new or established business could bring the relief of not having the capital to grow or expand your business as well as the relief from not being able to take advantage of business opportunities.
A small business loan enables you to grow your new or established business. The interest on a small business loan is tax deductible. Please speak to your tax accountant to determine the impact to your returns. Do some research to find a small business loan company that’s right for you.
Check around online for interest rates, and small business loan qualifications as well as other requirements (time in business, credit scores, minimum revenue, etc.), as well as for flexibility of rates and terms. Some lenders will certainly offer some creative small business loan options to deal with your specific circumstances.
Keep these ideas in mind as you search for your small business loan choices. You’ll get on the road to success in no time at all!