If you bring us a contract with a better offer, we guarantee to either beat that rate or pay you $500.

The Definitive Guide to Small Business Loans (2023 update):

Table of Contents

Small Business Loans: The Definitive Guide

 

 

“We have lost that which has made us great over the generations, and that’s the sense of personal and individual responsibility that we could come up with, we can pursue our aspirations and our dreams, and we will not be blocked by government regulation, by the inability to get a loan as a small business to make our dreams come true.” Jon Huntsman Jr., Former United States Ambassador to China

 

The Definitive Guide To Small Business Loans

HOW TO GET A BUSINESS LOAN?

 

 

A True Business Loan to Expand or Grow Your Business.

Here is the Easy Way to Go!

Working with small business owners to find business loans used to be easy. Before the turn of the century, all a business owner needed to do was go to his or her local bank. It was as easy as signing your name to a line of credit. It was known as a “sign and drive” business loan.

There was a seismic shift in banking after the financial meltdown in the mid-2000s. Businesses found that many of the local and state-chartered banks, along with the big money center national banks, locked the doors to their small business loans departments. The $100,000 question on most business owners’ minds is, “how do I get a business loan?”

Our goal is to provide you, the small business owner, with a concise yet extensive resource on “how to get a small business loan?” Our objective is to give you the information on small business loans that you are craving. Since 2005, we have answered thousands and thousands of questions from new entrepreneurs to seasoned business owners. These are men and women in all 50 states. The businesses range from new ideas and startups to 80-year-old established companies that have been passed down from generation to generation.

We have compiled a list of nearly 100 questions and provided the best answers to the question “how to get a loan for a business?”

Some Of The Questions We Will Answer Are:

    • How can I get a small business loan? Should I get a small business loan?
    • How to get a small business loan to start A business with bad credit?
    • How does getting a small business loan work?
    • How long does it take to get a small Business loan approved?
    • How to get a small business loan from a bank?

 

HOW TO GET A SMALL BUSINESS LOAN FOR A STARTUP COMPANY?

Startup funding, also called seed funding or seed capital, is money provided to a small business or entrepreneur to launch new business ideas or a new product. Getting a small business loan to start a company may be just the beginning of the many challenges you’ll encounter after choosing the path of entrepreneurship. 27% of small businesses say that they weren’t able to receive the funding that they needed.

Business owners often need to use more than one source of finance options when starting a business from scratch. We will review all of the options that are available to you when your business is first starting.

One of the most commonly asked questions we receive at Sunwise Capital is, “How do I get a small business loan for a new company?” Business start-up loans originate in many different places. Below, we will go into more detail about each loan and what it entails. We will provide you with some of the most common routes to obtaining start-up business funding so that you can begin your research to see which path best fits your business.

Take your time and read this from top to bottom, or scroll through it to find your question and the answers. We tried to keep the sub-topics together. You will see some of the questions are linked to more detailed pages if

SOME OF THE MOST COMMON METHODS INCLUDE: you want to dive in and read more. Enjoy your journey with our compliments. Let’s see if we can answer the question, “where to get a small business loan?”

Loans From  Friends And Family 82% of start-up funding comes from family, friends, or the entrepreneur’s savings

Traditional Loan Lenders + Banks qualifications, interest rates, and acceptance rates vary by provider.

SBA + Microloans Loans average about $13K

Venture Capitalists $11.5 billion invested into early-stage companies in Q2 of 2018.

Angel Investors 28% of angel investors invest in startups

Personal Assets 77% of entrepreneurs rely on personal savings when starting up

Peer-to-Peer lending This lending platform is much riskier than other alternatives.

Crowdfunding Raised $17.2 billion in 2017 In North America

If you’re a startup, business funding is hard to find. Few loan providers will want to take a risk on a pure startup with no track record or financial backing. When looking at your funding options as a start-up business, remember that bank loans are challenging to get without long-term financial records. Angel investors or venture capital investors will provide your business with the most funding, but they are often hard to find and persuade. Perhaps the best alternative startup funding is friends and family, crowdfunding, or using your assets and savings.

If you are very confident in your business and anticipate being able to pay back loan payments quickly, you can try out an SBA loan or microloan to get your business idea off the ground – keep in mind that only 40% of small businesses will be profitable.

What’s the best way to raise money for a startup and fund your business? Let’s find out how to get a first-time small business loan and explore how to get a loan for your business so you can hit the ground running as quickly as possible.

FAMILY, FRIENDS, AND FOOLS

Family? Friends? Strangers (Sometimes referred to as “Fools”)?

I generally lump family, friends, and fools together. I call them the 3 Fs.

While it’s common knowledge that family and business should never be mixed, they can often get you the financial boost your business needs to survive. Raise money by making a presentation and sending it to your family and friends. You’ll be surprised by how many in your circle are willing to help you with your current financial state.

A classic example of a friend and family business loan would be Amazon’s CEO and Founder, Jeff Bezos In 1994, Jeff asked 60 different family members, friends, and prospective investors to invest around $50,000 apiece in Amazon and help him raise $1 million. Only 20 said yes; this year alone, Amazon came in the top 10 of the Fortune 500 list. I’m sure the other 30 individuals wish they would have invested in Amazon.

Are you thinking about asking friends and family the best way to get a small business loan, hoping they step up to the plate? Are you at your wit’s end, wondering or perhaps worrying about how to get a loan for your small business? Entrepreneur magazine suggests five tips for doing it right.

The apparent advantage of this strategy is that you already have trust with your friends and relatives. It certainly makes financing your business easier when you can avoid the loan application process or not providing financial statements when you are just beginning. The not-so-obvious disadvantage is if the company struggles to repay the loan and the ramifications to the relationship. They say that you shouldn’t mix business with family. On the other hand, working with someone you trust and someone who believes you can have immense rewards.

Fools speak for themselves. Legend states that P.T. Barnum said, “There’s a sucker born every minute.” Although there is no proof, he said that we would caution looking for that sucker.

The strategy of separating people from their money is not a good long-term strategy on how to successfully get a small business loan.

  1. Choose a strategy How will you acquire this funding?
  2. Choose an investment type What type of loan are you looking for?
  3. Write down your pitch Make sure you have business plans written out. You may need to learn how to write a small business loan proposal.
  4. Keep your documents and communications business-like Keep your documents formal. If equity is involved, you may want to invest in a lawyer.
  5. Manage expectations Be realistic and honest as a business owner, you should keep communication open and send a monthly email to your investors with company updates and progress.

Crowdfunding

What is Crowdfunding?

When you have access to the world-wide-web, literally anything can happen. Crowdfunding enables you to raise capital loans via social media and online crowdfunding sites. As discussed in the Entrepreneur article cited above, asking for help via crowdfunding will allow you to seek the exact loan amounts you need to launch your business. If you want to

give crowdfunding a try, consider various crowdfunding sources like Kickstarter, GoFundMe, or

Indigo. Remember that the most successful crowdfunded startups have revolutionary products or compelling stories, so tailor your business requests to appeal to your audience.

Why Crowdfunding?

Crowdfunding is a way for entrepreneurs, artists, creators, charities, or Individuals to express their missions and values while raising money for their business endeavors. Crowdfunding is a way to bring awareness to passion projects which would otherwise have gone unfunded.

For example, GoFundMe highlights compelling stories and tries to help organizations and individuals that need it the most. For instance, on their success page, you will find several missions highlighted whose stories appeal to the masses and touch the hearts of those who may read them. By highlighting these stories, GoFundMe is helping to spread awareness by promoting their stories online on their platforms. By doing this, many more organizations and investors are interested in helping out. For this reason, crowdfunding is benefiting both parties.

Other forms of crowdfunding? Peer-2-Peer Lending

P2P is similar to crowdfunding because it is mainly based on the internet. According to Search Networking, P2P programs are focused on media sharing. Therefore, P2P is often associated with software piracy and copyright violation. Many platforms specifically for P2P lending will match an online lender with an entrepreneur that needs funding. The main caveat here is that you will find that, as a business owner, you must meet specific criteria to be eligible for P2P lending. These qualifications may require the start-up or small business owner to demonstrate a strong credit history, as reflected in your personal credit. Both crowdfunding and the P2P marketplace are excellent resource centers for alternative business financing. Forbes Magazine offers some unique insights into the top four P2P lending platforms. If you are interested in this type of lending, review the article before deciding to pursue this route. The infographic above demonstrates the challenges with loan programs across every kind of funding source.

Should I take out a Second Mortgage?

Do you have equity in your house? Are you tempted to tap into this cash to finance your business?

We’re sure the thought has crossed your mind.

We may have some surprisingly good news – did you know that some of the interest from taking out a second mortgage on your home may be deductible? If you are considering this option for your start-up funding, read this article from Bank Rate about Mortgage Tax Deductions beforehand.

We are not accountants or lawyers, so please consult with a professional before drawing on these funds.

As tempting as it may be, please make sure you consider the negatives before deciding on this option. Some Negatives to consider would be:

The big one – if your business fails, will you lose your home due to defaulting on the repayment of the second mortgage?

Can you afford to lose your house if the business does not meet your expectations? – How can a default on your mortgage loan affect your credit and future financial stability? – How much will Your credit score suffer if you foreclose on your home? – What are other consequences Individuals face when defaulting on mortgage loans?

Can we share a true story? We know of an entrepreneur that was seeking funding from a hedge fund. He asked for $10 million to start. The fund said they’d commit to $1 million immediately under one condition – he must be willing to sign over his house in case of a default. Without hesitating, the entrepreneur said, “Yes!”

The deal was done. The entrepreneur then had to explain to his wife that he just posted their home as collateral and that she needs to co-sign the agreement. After the deal was inked and the entrepreneur borrowed an additional $4 million, he was talking to the lender when the lender said that the only reason he committed to lending the money was the immediacy to the answer of your willingness to use your house as collateral.

The moral of the story is if you’re not sure, then don’t. Trust us when we tell you that there will be many sleepless nights worrying about all the minor details of your business – the last thing you will want to worry about is whether or not your kids will have a roof over their heads. The flip side is that if you’re not 100% committed and dedicated to your business idea, why should anyone else? Think about it (long and hard).

Our advice to you – do your research and ask professionals for help. When considering taking out a second mortgage, you should understand the consequences and the benefits of taking out a second mortgage. If you have done your research and still feel clueless, confused, or uncertain, our best advice would be to follow your gut!

Using other personal assets

Should I obtain a Personal Loan?

A personal loan is like a home equity or a second mortgage conundrum. These loans come with a personal guarantee, meaning you are 100% liable for the repayment. Failure to do so can ruin your credit or force you into bankruptcy. Be very careful when pursuing this path. Note that many of the business loans discussed here do not require the traditional personal guarantee. While the cost of funds may be a bit more expensive, you eliminate that extra burden on your credit and finance. Personal Guarantee loans are signed by anyone who owns a minimum of 20% of the cooperation. It is also important to understand that personal guarantees are not secured loans because the agreement does not contain or bind specific assets.

Also, please understand that you are violating the first cardinal rule of starting a business. You are commingling your personal assets with your company. By mixing personal with business assets, if the stuff hits the fan, you might find yourself explaining to the IRS how or why they should allow certain tax breaks or benefits. We recommend speaking to a lawyer about piercing the corporate veil and how to protect your assets.

SHOULD I APPLY FOR CREDIT CARDS?

Credit card carries all the same risks noted above. Most so-called “experts” will tell you it’s just plain dumb using your credit cards to finance or bankroll your business venture. Naturally, some have successfully used these available lines to parlay them into quite the venture.

Here’s another true story about an entrepreneur who did just that. By the way, these are not anecdotal stories but ones we are intimately familiar with in detail. This entrepreneur took a $10,000 investment from his credit card and parlayed it into a monthly spend of $200,000 to $300,000. The cool thing was that his business model allowed him to pay off the credit card every month before the money was due!

SHOULD I TAKE MONEY FROM MY 401(K) OR RETIREMENT ACCOUNTS?

Well, the good news is that you can use your 401(k) or retirement funds to springboard your business. The bad news is you’re risking your safe retirement money, and if the company fails, you may sweep floors until you’re 93.

Now that we have that out of the way, your retirement funds do offer a legitimate solution to getting the funding you need. Some rules and regulations surround this process, and our most reliable advice is to speak to a well-versed expert. You’ll also want to consult with a knowledgeable attorney and CPA. You don’t want to screw up here because when you do, you must answer to Uncle Sam and the IRS

Angel Investors and Venture Capitalists

It’s a pretty exciting journey if you decide to look for funding from an Angel or Venture Capitalist.

Just turn on CNBC. The lineup is deep with shows where entrepreneurs pitch their businesses to wealthy industry moguls. You have Shark Tank with Mark Cuban, Mr. Wonderful, and the other investors. Marcus Lemonis as “The Profit.” The Billion Dollar Buyer,

Make Me a Millionaire (not to be confused with “Who Wants to Be a Millionaire”), Cleveland Hustles, and the West Texas Investors Club.

What’s the difference between an Angel investor and a VC or venture capitalist?

There are a few significant differences between angel investors and venture capitalists. These differences include:

Number of investors

  • Amount of investment
  • Level of involvement
  • Due diligence

Angel Investors

 

Angel investors are usually only one person. Therefore, you will be dealing with one person while pitching your business and creating terms and agreements for the funding.

With an angel investor,

the amount of seed money they are willing to invest is usually smaller. These amounts can range anywhere from $25,000 – $100K depending on the business or idea and the level of trust the angel investor has in the entrepreneur. This is where reality shows can blur the concept of an angel investor – we’ve all seen Mark Cuban offer $1M or more by himself. In a real-life situation, angel investors can still provide more significant amounts of seed money by grouping together to invest individually more in raising the full ask amount.

Angel investors are usually less involved than other types of investors. Although they may offer advice or particular business instruction, they will often leave the business, and business decision-making, up to the business owner. Angel investors will also have a low level of due diligence.

Venture Capitalists

Venture Capitalists are often part of a larger group, company, or corporation. Because of this, they will often invest more in your business or startup. The average investment amount totals around $7 million, more or less, per investment.

Venture Capitalists want to invest in a business with much more upside potential and one in the early stages vs. a startup with no proven track record. Venture Capitalists will also do extensive due diligence since they have a fiduciary responsibility to their investors.

SBA Loans and SBA Microloans

SBA Loans

The U.S. Small Business Administration provides government loans to small businesses to help promote economic growth. These small business loans must be used 100% for business purposes.

Most people are a bit confused about the SBA and the loans. The SBA is not a direct lender. You still need to go to a lender that offers these loans, and you must qualify just like any other loan. The difference is that the SBA sets the guidelines for these loans with the lenders they partner with and will be the government backstop or guarantor if the loan defaults.

In theory, the idea is to make access to capital more readily available. Remember that the requirements are stringent, and there is copious documentation. The positive is that it reduces the risk for the lender, thereby making it easier for them to get to a “yes” for you.

Microloans

You may need a microloan if you’re looking for an amount, usually up to $50,000, to borrow.

The Microloan Program is through the SBA.

The Small business Administration, or SBA, makes micro-loans to startups, newer businesses, or small businesses that are starting to grow.

The average loan is about $13,000 (up to $50,000). Like all loans, there are several roadblocks you must navigate around. First, you must still pass the credit analysis and whether the risk is worth it. What this means to you is that you either have to provide personal guarantees, collateral, or assets; usually, it’s both.

If you qualify, you can use the money for:

  • Capital
  • Inventory
  • Supplies
  • Furniture
  • Equipment

One big caveat is that the microloan cannot be used to pay down pre-existing debts or purchase real estate. In theory, the microloan is usually a bit easier to qualify for versus a larger loan. In this case, size matters. Again, most microloans are $50,000 or less. The upside of applying through an alternative lender is you may qualify for a much larger business loan with bad credit.

Traditional Bank Loans and Credit Unions

The question of how to get a small business loan from a bank looms large for most entrepreneurs and business owners, let alone startups. First, traditional lenders and financial institutions require a personal credit score north of 680, although most want 700 or better. When considering your business for a loan, most banks need you to supply them with records of the last three years of personal and business tax returns. They also want the loan secured by some collateral to ensure you will pay it back. Collateral can be anything from cash or assets, including your home or automobile. Traditional Bank Loans

Be warned that traditional banks’ application process is usually lengthy and can take as much as ninety days before a decision is rendered. If you’re still interested in getting a small business loan from a traditional bank, I suggest walking into your local bank and asking.

Credit Unions

Credit Union and traditional banks are very similar. However, the critical difference between the two is that conventional banks are more interested in making a profit, whereas credit unions want to serve their members. With credit unions, there are often fewer small business loan options available because they are not as large as banks there. There are also fewer credit union branches open than there are bank branches. lack of locations could hinder your accessibility to a credit union.

Business Lines of Credit and Credit Partners

Should I use a Credit Partner?

One question you need to contemplate when starting your small business loan search is whether it makes sense for your business to have a business partner, or a partner in general, to utilize their good credit. Many small business owners use this strategy to help them get a business line of credit.

A partner with an outstanding credit report and history can significantly increase your ability to get the funding you need for your business. The bonus to pursuing this route is that having a partner with good credit standing also enables you to talk to the lender about the small business loan terms. Discussing the terms of your loan means that you may able be able to get lower interest rates and a more flexible repayment option.

Naturally, this is easier said than done. The first step is finding a good, reliable business partner. The partner should be someone you trust and have the same vision of your business. The next step is to fully explain the details of your business, the associated risks that come with becoming a partner in your firm, and what you need from them. Lastly, you must find someone prepared to use their excellent credit for your business.

The odds are when you are looking for a business credit partner that, the situation will often work in one of three ways:

  • You will probably find a credit partner that may lend you the money directly. The cash infusion will be done as a loan (bypassing the traditional lender), otherwise known as debt financing.
  • You may find the credit partner proposing that you sell a part of your business in exchange for equity or stock in your company. The name for this is equity financing.
  • Your credit partner may require a percentage of your business or a combination of debt and equity financing. To get a better idea of how this works in real life, watch “Shark Tank.”

Should I use a Business Line of Credit?

A Business Line of Credit provides more flexibility than a traditional small business loan. With a business line of credit, you can potentially borrow a larger amount than other loan types. A business line of credit works just like a traditional credit card – you will only pay interest on the amount you borrow, and you can borrow and repay as many funds as you want as long as you don’t exceed your approved credit amount.

To qualify for a business line of credit, most providers will require that your business have substantial revenue, at least a few years of business credit history, and a strong FICO score. If the credit limit is larger, the lender may require that you post additional collateral.

Questions to ask yourself as a Small Business Owner

Before you take the plunge and start raising capital to start your business, you may want to think about these questions:

  1. Do you have something that’s of interest to the investor? It’s great that you’re passionate about your idea. However, does anyone else care or think it’s something that will make money?
  2. Is your idea a proven moneymaker? Let’s face it – there are tons of great ideas out there. It’s all about execution. If your ideas or business models are that novel, you may need to get it going on a shoestring budget to prove proof of concept.
  3. Will they respect you in the morning? Bringing on an investor or financial business partner is a lot like marriage. Breaking up is very painful. Make sure that your investor or money person is a good match. Don’t let the thought of getting the startup funding cloud your better judgment.
  4. Are you committed? You must demonstrate that you are willing to work at least half a day. That means from 8:00 AM to 8:00 PM – at a minimum. Some might say you better have the “eight to faint” attitude. You better be all in, or you might find no one wants to take the plunge with you, no matter how good the plan for the future
  5. Does the business have long-term potential? Few true investors want to invest in the hottest trends. The idea of FOMO, fear of missing out, works only if that fear aligns with a long-term economically justified goal. Trying to catch the next hot toy for the holiday season is a really long shot at best. Leave predicting the future to the carnival fortune-tellers.
  6. What are the profit margins? your margins are a very critical piece of information that can help you grow your business exponentially. Know your margins. If it costs you $6 to manufacture a product that’s going to retail for $9.99, consider if it is worth it.
  7. How affordable is your product or service? Is there a universal appeal to your idea? Alternatively, is it something only a few people will desire? There is nothing wrong with selling something to the uber-wealthy; however, if that’s the case, your business ideas need to be spot-on with no margin of error.
  8. Are you a salesman? Everybody sells something. Even a doctor must “sell” you on a treatment plan or prescription for health. If not, the investor will fear that they are now the mouthpiece for your company. Business owners need to be the chief salesperson until they can replace themselves. If you’re not excited about your business, why should anyone else?
  9. Do you know how to negotiate? At some point, you will need to take a stand. If you are realistic and understand your business’ worth, you will be okay. The art of negotiation is a skill, like a muscle, that needs to be worked on over time to improve.
  10. Are you full-time, part-time-full time, full-time-part-time? See above – Are you Committed? Tell me why you want my money if you’re not going to work for it all day long, if you’re building a business and looking for financing options.

The Business Loan Journey for Veterans and Minorities

How do You Get a Business Loan as a Veteran?

You proudly served your country, and we at Sunwise Capital want to thank you for your service. As a Veteran, organizations are available to help you secure funding for your business. One place to visit, which should be on the top of your list), is the Office of Veterans Business Development. This resource is ideal for beginning a new business or startup venture. The office mentioned above is a tremendous resource for all potential veteran entrepreneurs. Their team of professionals can assist you with all of your business ownership needs. It’s an enormous business resource, and we recommend it highly.

Of course, as a well-trained and highly disciplined individual, we know it’s incumbent on you to explore all your options regarding getting the funds you need to launch your business. Don’t forget to consider your networks, such as friends and family, and the public financial institutions that lend money. Use the power of the internet to seek online lenders, sometimes referred to as alternative lenders, that might offer you the funds you need with much less hassle and paperwork. Lastly, check out the options Sunwise Capital has to offer.

How do you Get a Business Loan as a Minority?

The U.S. Census Bureau states that minority-owned businesses are expanding rapidly. It notes that it’s growing faster than all other segments of small business owners in the small business market. Minority-owned businesses and entrepreneurship are exploding and represent almost one-third of all small business ownership. It’s no surprise that in states like Florida, Texas, and California, over fifty percent of small business owners are part of a minority group.

The struggles of getting access to capital loans and solid loan sources are similar between minority and non-minority-owned businesses. It’s a big challenge. As we stated before, new business funding will often depend mostly on friends, family, and the personal savings you have saved for most of your startup capital and funding.

If you are a minority-owned business owner, understand that the alternative lenders are at the forefront of providing the necessary capital to help you grow and expand. However, there are other paths you can pursue. Minority business loans can come from places like the SBA, Microloan providers, private microlenders, and even non-profits. As a minority business owner, some grants are available to you. These grants get very specific and are broken down to serve all minority groups.

For example, grant associations for minority business owners specialize in things ranging from immigrant grant assistance to Native American grant providers. Make sure to research which grants will work best for your business before you pursue other funding options.

Alternative Loan Lenders

Let’s face the facts – the odds are that you’re not going to qualify to get a business loan, or any other funding for that matter, if you don’t have good credit. The first thing a bank does when you apply for a small business loan is to check your credit score with Experian, Equifax, and Transunion. Check your credit before the bank even looks at your business loan application. The truth is that if your credit score is below 680, the bank will turn you away immediately. All lenders like banks, credit unions, and online lenders must check your social security number and always do at least a soft credit pull. Almost all banks will reject businesses where the owner has a mid-600 to low 700 FICO score.

Primarily, banks only recognize two types of potential borrowers:

  1. Those that are perfect
  2. Those that are delinquent.

If you pass that first test, your next hurdle will be the amount of time you have been in business. Banks typically require that your company have at least three years of operations. They will also want to see all principal business owners’ personal and business tax returns.

You’ll find much more flexibility with alternative small business loan lenders. Their loan approval process is different – they’ll look less at personal credit and zero in on the business’s health and cash flow. The best alternative small business loan lenders will understand that your FICO score doesn’t necessarily reflect all of the facts.

Why do you ask? Because everyone knows that business owners always have pressure on their personal credit scores. Business owners have challenges with their FICO score because they have more credit cards, expenses, cars, or real estate. Regardless of credit, some of the best business loan companies will assist you and your business despite having a personal credit score in the low 500s. In reality, the only thing that alternative loan lenders will want to examine is the last three months of business bank account statements.

Believe it or not, seasonal businesses can also get funding through alternative loan providers. How? By giving the alternative lender the last twelve months of business bank statements to demonstrate an average monthly revenue and the ability to repay the loan.

In short, alternative small business loan providers will provide:

  • Fast and easy approvals
  • Affordable Payments
  • Excellent terms
  • Better rates
  • The same loan types as a traditional lender

The 5 C’s of Credit

On the list of obstacles you may encounter when trying to get a small business loan through a bank or traditional loan lender is what’s known as the 5 C’s of Credit. The 5 C’s are:

  1. CHARACTER
  2. CAPACITY
  3. CAPITAL
  4. COLLATERAL
  5. CONDITIONS

Let’s briefly break each one down.

  1. Character is your history. Character includes your full credit history, sometimes referred to as your FICO score. Your credit history speaks of your creditworthiness and ability to repay a loan. Banks will review your history from all three major credit reporting agencies: Equifax, Experian, and TransUnion. Let’s not forget that it also means providing references who can speak about the type of person you are and whether you have a criminal history.
  2. Capacity is merely a measure of your ability to repay the debt. Here, the loan provider or bank will examine your debt-to-income ratio.
  3. Capital is your skin in the game. Traditional lenders won’t give you 100% of your financing needs. Be prepared to provide at least 20% in personal down payment into your venture.
  4. Collateral is what you use to secure the loan. Borrowing is not without risk; banks want to minimize this risk as much as possible. So, they want you and other shareholders to use any assets you may have as collateral in the event of a default on your loan. Collateral may be homes, automobiles, or other liquid assets like stocks.
  5. Conditions mean the terms of the loan and how you intend to use the funds. Think of it this way – when you borrow from a bank, you relinquish your spot behind your desk. The banker will require you to meet specific numbers, revenue, or cash flow. If you miss your goals, the banker may determine whether they need to take control of your banking to ensure they get repaid. Moreover, if this means cutting your salary – so be it.

Working Capital Loans and Merchant Cash Advances

Working Capital Loans

Do you need help with your day-to-day operations? Are you having challenges with your cash flow due to rapid growth and expansion or customers who are paying slowly?

Working capital loans are usually available to help business owners get a jump on their day-to-day operations or the costs of funding a growing business. These loans are typically not used for long-term assets.

Typically, Working Capital Loans will have the lowest rates out of all of the loan options.

Merchant Cash Advance

Of all the loan options, this is considered the easiest of all loans to secure. Why? Simple. The basis of the loans is your business’s daily credit card sales.

A merchant cash advance, otherwise known as a cash advance or MCA, is not a loan at all. An MCA allows you the ability to sell your future credit card sales in exchange for cash immediately. Is your personal credit a factor? Generally, no.

The cash advance is an excellent choice for any business with reliable credit card or debit sales each month. Therefore, MCAs are considered a low risk based on the owner being dragged down by bad credit. On the bright side, business owners with a high FICO credit score often choose the merchant cash advance. Why, might you ask? The reason is simple. Easy daily payments, relatively short-term, and an easy-to-understand lending process allows for continuous reborrowing. The key here is that the daily payments are based on a percentage of your daily sales or daily batched credit card revenue. If Sales are up, your MCA repayment amounts will increase. Are your sales down? No problem. You will pay less.

For these reasons, the most accessible small business loan to obtain by far is the merchant cash advance. Over the years, MCAs continue proving it is one of the best options for many businesses. Remember, even if you have poor credit, this type of funding option allows you to grow your business rapidly and consistently over time.

One last question – do you want to get cash fast? Then you should seriously consider this type of financing. The repayments are manageable based on your credit card sales, and the funds are typically paid off in two years or less.

FAST BUSINESS LOANS AND UNSECURED BUSINESS LOANS

Fast Business Loans

Fast business loans aim to receive your money as soon as possible. Remember that needing quick loans means you’re willing to pay more for the speed and convenience that online lenders offer and that you won’t get working with a bank.

Business loans from banks are known for keeping loan costs down, but the lengthy application and underwriting process means it can take months to get your funds. As well all know, TIME IS MONEY, and the longer you wait, the more income your business loses.

In today’s world of instant gratification, sometimes emergencies happen, and you need a quick business loan. Often some opportunities that present themselves without the ability to take advantage of them immediately can mean lost revenue or profit. Consider when a vendor or supplier approaches you with a 25% discount on your inventory or supplies; however, you must take advantage of the pricing now. Alternatively, maybe a competitor is about to go out of business, and if you can put some cash upfront now, they’ll sell you either the business or customer list cheap.

Fortunately, technology allows most online business lenders to process a business loan application in minutes. The efficiency of the online lender compared to the traditional lender like a bank or credit union may take 30 days to review your application and another 30 – 60 days to approve and disperse funds.

Why wait weeks or months when you can have your money today or a day or two at the latest?

Both large and small businesses need access to capital to ignite growth and expansion. The key is ROI. Return on Investment. Many times, it’s solving a business emergency, hence the need for a fast business loan.

Unsecured Business Loans

Unsecured business loans mean securing capital without providing collateral or assets to “secure’ the loan. Banks traditionally require using assets or collateral to make sure that they have the backing of an asset they can liquidate to pay themselves back in the event of a default. The additional benefit of the unsecured business loan, besides the lack of collateral, is the lack of a traditional personal guarantee. These loans do not report to the individual credit bureaus but do notify the business credit bureau. What does this mean?

Getting the loan in the business name means two things to you. First, it does not show up on your personal credit report. As a result, it doesn’t negatively impact your score. Most lenders will do a soft credit pull to see if you qualify, and only after you’ve accepted the deal will they do a hard credit pull.

The fact that it stays off your credit report means it doesn’t reduce your debt-to-income ratio making it easier to continue building your credit or making other loans, such as mortgages and auto loans, readily available at more competitive rates. This perk is an attractive advantage over a secured loan: As stated, you don’t have to put up collateral, such as business equipment, inventory, or property, to obtain financing in the first place. That means that if you fail to repay the loan, the lender cannot directly seize your assets.

Second, reporting to the business credit bureaus helps build your business credit. Building strong business credit is like receiving a gold star as a child in grade school. Other business lenders see this activity and make them feel more secure and comfortable when lending you more money at better rates with better terms.

Ask a bank to borrow $100,000, and often they will tell you that you need to have at least $300,000 in the bank to secure the loan. Well, if you’re like me, if you had the $300,000 available to obtain the loan, you wouldn’t need the bank, right? Most financial institutions want a ratio of 3:1 to secure the bank. So, for every dollar you need to borrow, they want $3 in assets to cover it.

A more significant challenge here is how they value the assets you want to use. It’s not unusual for a business to use either its equipment or inventory to secure a loan. The value to you and your business is usually much higher than the banks. Often you will see a dramatic reduction in the value of the assets. Think fire-sale value, which is 5 to 10 cents on the dollar.

The advantages of the unsecured business loan are (1) speed or time to funding. Generally, we’re talking about one to two days. (2) No risk to your assets. No collateral means eliminating the need to use cash or other valuable items. Eliminating collateral is critical for businesses just starting or operating for several months or years. Many of the small businesses and their owners don’t have those assets to use as collateral. (3) Loan amounts are usually between $10,000 to $100,000.

The disadvantages of unsecured business loans are (1) higher interest rates. All loans are adjusted on a risk basis. More risk means a higher interest rate. No collateral means high risk in the event of default. Coupled with perhaps your industry type, time in business, credit scores (as low as 500), annual revenue, cash flow, and NSFs (to name but a few), you can see why you may not get the best or most aggressive rates. (2) Personal guarantees may still apply. Depending on the risk, these loans may sometimes need a personal guarantee. The guarantee means you are personally liable for the repayment, regardless of whether the business survives. (3) These loans may be harder to qualify for because of the risks above. (4) Repayment terms may be shorter due to risk assessment.

Large Business Loans, Seasonal Loans, and Equipment Loans

Large Business Loans

Are you looking for a large business loan? How about getting 24-hour approval on loans up to $2M? Getting approval for a $2M is not a problem. Your business must:

  • Be in business for at least three years.
  • Must be generating at least $1.5M a month in revenue.

Over the years, we’ve spoken to thousands of small business owners and found that almost all of the challenges any business faces can be summed up in two words – cash flow.

Without trying to be funny, you need cash flow for the cash to flow. Without it, you’ll start seeing missed revenue targets, more aggressive competitors that you cannot seem to compete with, and frustrated customers leaving your company to seek out other options.

Don’t confuse small business loans with the actual dollar amount available to you. Getting a working capital loan usually means making monthly payments with terms ranging from 6 months to 2 years. These loans typically come without the need for securing them with collateral or assets. Some of the significant advantages of these large business loans (vs. the bank) are:

  1. You can have bad credit, and it will not affect your loan application decisions
  2. Your small business does not need to be profitable
  3. Generally, there are few industry restrictions
  4. You can have open tax liens under $200,000
  5. Funding for up to $500,000 in a few days, with larger amounts within a week

Seasonal Loans

Are you a business that has erratic cash flow due to the nature of your business? Depending on your small business’ industry, some businesses see more sales during particular times of the year. Depending on circumstances such as weather and location, many businesses may see a drop in revenue during the off months. Securing funding for these slower periods can keep a good business going until the busy season begins again.

Equipment Loans

An equipment loan is strictly used for financing any equipment needed to keep your small business growing, operating effectively, and profitable. Sometimes, these types of loans can be difficult to secure due to their requirements. For small business owners, the hardest element to meet is the need for decent credit. Business owners often use alternative loans instead of equipment loans to get the supplies needed to operate.

CREDIT – REVOLVING LINE OF CREDIT AND DEALING WITH BAD CREDIT

Revolving Line of Credit

As we discussed above, a revolving line of credit works just like a personal credit card. Think about revolving lines of credit like a well that always replenishes the water when you are thirsty.

A line of credit supplies funds that are always available to your business. You can repay and reborrow these funds whenever you’d like, as long as you don’t exceed your approved credit limit. These funds are usually made available once again after repaying some or all of the loan. The idea of the line of credit is to supply business owners with a way to have funds available on an as-needed basis.

Bad Credit – How to get a Small Business Loan

Does securing the best business loan seem impossible? Does it doubly hurt because your personal credit is not the best it could be?

You know how it goes – bad credit means no financing from your local credit union or big national bank. I know what you’re asking – why? Because what matters to those banks is profits. And by profits, we mean yours – theirs. Banks and other forms of traditional credit and loan providers are motivated to make as much money as possible. The truth is that lending less than $5 million, if not $20 million or more, is just not profitable to them. After all, they have to sponsor the Super Bowl and have dozens of glass skyscrapers in every major city.

The good news is there is hope. There are alternatives. Yes, even if your credit score isn’t the best. Alternative loan providers will focus on your business’s strength and proven success instead of your credit history.

It’s critical for any business to have cash on hand. it would help if you covered day-to-day operations and unexpected expenses. You never know when there is an opportunity to win more business – it just never happens without money. Cash shortages can mean the difference between making it or crashing.

So how do you eliminate cash flow issues to ensure you always have some on hand? Not the banks, that’s for sure. Traditional lending is going the way of bookstores; they’re getting hard to find.

Most business owners are sick and tired of having their banks welcome them in to take their money, only to slam the door in their faces because of credit issues or other factors. The result is alternative lenders flourishing and vying for your business.

How Sunwise Capital Can Help

Sunwise Capital makes getting a loan for your small business fast and easy. 24-hours fast. One-page application is easy. You can apply in the morning and get funding before you go home.

What are you looking to do? Grow, expand, meet payroll, buy some advertising or inventory?

WE KNOW YOU WANT FAST AND EASY BUSINESS LOANS. DO YOU WANT MORE MONEY WITH BETTER RATES AND BETTER TERMS?

Are you looking for a quick business loan? Our clients are pleasantly surprised at how fast and easy it is to apply and get funded. Do you want fast business loans? Complete our one-page application and provide the last three months of business bank statements.

Do you need $100,000 fast? Get approved today and fund today. Need more than $100K? Give us 24 – 48 hours to fund you up to $250,000. More than that? Qualified business owners can secure loan amounts from $500,000 to $2M.

DO YOU WANT FLEXIBLE RATES AND FLEXIBLE TERMS?

Our underwriters work diligently to make sure your business loan works for you. No one size fits all – no big box store approach. We take pride in our unique boutique, fully customized loans that are designed to meet your needs. Our small business loans offer daily, weekly, and even monthly payments. We have business loans for six months and special programs for five years.

Sunwise Capital will help you each step of the way.

Sunwise Capital knows that as a small business owner, you have intimate knowledge of the many challenges of getting that small business loan. You understand the difficulty and many challenges of qualifying for a bank small business loan or SBA business loan. Even if you have an established and profitable business, it’s a huge challenge. We believe, at Sunwise Capital, that you and your small business deserve a better business loan option. We started Sunwise Capital to offer a more effective, less costly, quick, and easy way for small business owners to secure a small business loan. We wanted to answer the elusive question of how business owners access business loans.

All across the U.S., business owners have positioned themselves for success by securing their business loans to help them grow and, sometimes, explode their businesses. Their grit and determination to build their business with additional funding helped put more people on their payroll and become vital to our growing economy. Providing affordable business loans sometimes in a day or two makes it no wonder over 75% of our clients will come back to borrow 2 to 3 times a year, some for several years. Why? Because we are looking for a long-term relationship, we offer you more money with better rates and terms.

There is no question that money or available capital is the lifeblood of any business. Locking down a loan is critical for long-term success. Sunwise Capital can realize your goals and dreams with our unique business loans. These customized business loans will enable us to always put you first. Our business loans will help you meet:

  • Ongoing expenses
  • Consolidate debt
  • Advertise
  • Increase or replace inventory
  • Pay taxes

Do you need a business loan for your investment plans?

Our business loans will undoubtedly help you get to the next level.

Our Business Loans provide immediate funding to your business with cash or capital.

SUNWISE CAPITAL – QUALIFICATIONS:

At Sunwise Capital, we want to help as many small businesses as possible. We believe in making your business dreams come true. To do this, we have fewer qualifications than a traditional loan lender or bank. At Sunwise Capital, we make our loans more flexible and stress-free for small business owners. Our few easily obtainable qualifications differ from those of other traditional and even non-traditional loan lenders. Our requirements are:

  • 6+ months in business
  • $12,500 monthly revenue
  • 550 FICO score or better
  • Terms ranging from 6, 18, or 24 months

With Sunwise Capital, your small business can get up to $2 million in funding.

Sunwise Capital will never base your loan eligibility strictly on your personal credit, assets, or debt. Instead, we look at your business capital to determine your loan eligibility.

Whatever your business plans are, Sunwise Capital’s unique business loans can help you reach your goals. We will work with you one-on-one through the whole process. We will ensure you understand all your options and help you choose the best business loan that suits you and your business needs.

All funding options have their own set of pros and cons. You must determine what works best for you as a business owner before moving forward. We will help you consider all the options before making your decision. Alternative lenders are the “new” lenders. We can provide the best, easiest, and most flexible business loan options to meet your needs if you need funding. Sunwise Capital proudly serves small businesses in all 50 states. So, whether you’re in Boca Raton, Florida or anywhere in the United States – Sunwise Capital can assist you today.

Sunwise Capital also has experience assisting small businesses in 725+ unique business industries. Whatever your business is, Sunwise Capital is ready and willing to help!

Call 888.456.9223 today

No salespeople. Speak directly to an underwriter – Professionals who understand business because they are business owners who understand what it takes day today to be successful.

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Mark J. Kane, Founder & CEO of Sunwise Capital, is a distinguished entrepreneur with over 16 years in business financing. Beginning as a psychologist, he quickly became a trailblazing Hospital Administrator. Mark has built multiple ventures, notably accelerating a startup to $18M within months. His transition to Sunwise Capital stems from a deep-seated desire to empower business owners with strategic financial solutions. Recognized for his expertise, Mark's leadership at Sunwise Capital reflects his commitment to fostering business growth and success. about the author.

Take Your Business Further With A Loan From Sunwise Capital