Small Business Loans Online

Fast Small Business Loans

Term Loans are the most common type and what people think of first when they’re pursuing a small business loan. They both have similar characteristics. A “term” is the time period in which you’ll be making recurring payments. A typical loan term with a bank can be anywhere from four to 10 years. In some instances, it can be even longer. The purpose behind your loan may help determine the term.

Term loans are usually taken to make real estate or equipment purchases. The goal is to expand a business. The goal is fulfilling a business’s needs and providing money so that a company may grow or so that an individual may finally be able to start a business of their own.

These kinds of purchases are considered investments due to having an impact on the future growth of a business. This means they can also have an impact on how long the term may turn out to be.

Although it’s not the only option, many business owners will turn to a bank when they’re looking to apply for a small business loan. Although pursuing a bank is common, it’s best to look at all your options and compare rates.

Applying for a term loan can take several weeks or months. In order to apply for one, you’ll need to visit a bank you trust and meet your assigned banker. You’ll then need to fill out and submit an application.

An SBA-guaranteed loan is subsidized by the government and has become a favorite due to its appealing rates and terms. The government agency is backed by the Small Business Administration, which is known for offering support to smaller businesses. The SBA works with lenders like credit unions, banks, and charitable organizations to provide a fraction of loan payments to these businesses.

The SBA is able to provide 85% of loans in the $150K region and 75% of anything higher than $150K. These loans can be used towards creating new businesses, growing existing businesses, new construction, a business’s capital, and refinancing existing debt.

Additionally, the SBA may offer express loans that provide 50% of a loan up to $350K. Microloans are made by single lenders instead of unions or banks. Small businesses that are new or expanding may receive up to $50K with their loans.

These loans are most beneficial for businesses that are looking to expand or evolve and are provided by Certified Development Companies. Disaster loans are loans with low-interest rates to be used to help repair property, inventory, or equipment that have been destroyed or damaged in a disaster. They are also the only program by the SBA that is not only for small businesses but for bigger ones as well.

The other two types of fast loans are commercial mortgages and business acquisition loans.

A commercial loan provides funds to purchase or renovate properties like offices, warehouses, and retail spaces. Business acquisition loans provide capital to buy an existing company or to start a new franchise.

Business lines of credit provide a lump sum of revolving credit. Borrowers can use up to the credit limit. Once the used amount is paid back, it is available for use again without having to reapply. They’re like credit cards in that you are charged interest for the money you take out. There is financial independence in this type of situation, but it’s important to keep track of how much you spend.

Startup business loans are geared towards startup businesses that have very little business history and are based upon the business owner’s personal credit history.

Equipment financing is provided to help a business afford equipment and inventory like office supplies or warehouse equipment.

Finally, there are loans where you may receive financing in days. With a merchant cash advance, you may receive the funds quickly as long as you agree to give the lender a fraction of your profits from commerce.

Business credit cards are also a great option if you don’t need a lot of cash. They may also build up your business’s credit history, which will help with getting loans in the future.

Accounts receivable financing, or invoice factoring, allows companies to sell their unpaid invoices. This type of method is also known as factoring.

How to Apply for Small Business Loans Online

Before applying for a loan, there are steps you should follow in order to best prepare.

1. Anticipate the amount of funding you will need. Review your expenses and budget how much you can afford in loan payments. You can determine this by going over your debt service coverage ratio. Lenders will typically prefer a 1.0 ratio.

2. Look over your credit score. Review your credit score for potential errors or negative marks. These may lower your chances of approval.

3. Compose a solid business plan. This will show lenders the foundation of your business and how profitable it will prove to be. It’s very important to show a strong business venture and a business plan that is on track. A business plan should start off with a basic summary of your company. Then, it should include the following:

• a description of your products or services
• the team behind the business, along with skills and backgrounds
• your target audience and the current market
• any plans with your sales or marketing
• a financial breakdown of your expenses and an estimate of the ultimate cost to grow your business
• an appendix of any documents or resources that are related to your plan

Below are the summarized steps to getting a loan for your business venture.

1. Determine the amount of money you will require from a loan. This is where a business plan will serve you greatly because the lenders you speak to will want to see that the money they provide will be used wisely. Additionally, determining the amount of money and creating a business plan for yourself will keep you on track and help your business grow.
2. Make a decision as to which of the loan types will be best for you. Once you figure out the amount of money you will need, you can determine which loan type will best suit your business venture.
3. Review your credit score. It’s a good idea to look over both your personal and business credit scores. Make note that if you’re just starting your business, there won’t be much credit history. If your business is a sole proprietorship, there will be a focus on your personal credit score. Once you’ve had your business for a while, your personal credit won’t matter as much, but it’s always wise to continuously review your credit scores and make sure no errors or issues arise.
4. Gather any documents you may need. Check with your lender to see what documents and information they will need from you for your application. Banks will typically be the most demanding of information as they will ask for financial statements and projections, as well as bank statements. Other things they could ask for are your tax returns and your lease or license.
5. Estimate your collateral. Setting up collateral will help greatly with securing a loan. Collateral can include things such as equipment, property, inventory, or vehicles. If you don’t have any collateral, you can use personal assets instead. This could include your home, jewelry, tools, fine art, and savings account. Keep in mind that if you default on the loan, you risk losing your collateral.

The next thing to do is apply for a business loan online. Listed below are the documents and personal information that will be asked for when you’re filling out your application and speaking with your lender.

• Background and History. This can include:
  • any addresses you’ve lived at
  • any of the names you’ve had in the past
  • your criminal record
  • your education
• Resume. Here you should include the roles and positions you’ve taken on before, as well as any experience you’ve had running or managing a business.
• Business Plan. This should be a general outline of your current business standing and future projections.
• Tax Returns. You’ll likely be asked to bring any tax returns from over the past three years.
• Loan History. You’ll be asked to provide a history of any loans you may have received before.
• Bank Statements. Most lenders will ask you to bring in a year’s worth of bank statements.
• Collateral. This applies if you’re bringing in any collateral or personal assets, as mentioned before, in preparation to secure a loan.
• Reason For a Loan. Lenders will want to know exactly how you plan on using the loan they may give you.
• Debt Schedule. Lenders want to know about any outstanding amounts of credit or loans for your company, as well as your company’s payments every month and any interest or upcoming dates for payment.
• Legal Documents. Your lender may ask for the following:
  • Business license or registration
  • A copy of your lease
  • Your certificate of formation
  • Copies of any contracts you might have
  • Any franchise agreements you’ve made

It is important to weigh the good with the bad before making the decision to apply for a business loan online.

Advantages

• Allows you to invest in assets that may bring value to your business. Assets will also help with increasing revenue. Examples of these assets are new equipment or property.
• Loans may help grow your business without rapidly losing capital.
• You’ll have a better time managing your cash flow. Accounts receivable financing and business lines of credit can help with meeting your capital needs.
• Getting a loan for your business can help with building your credit score.
• Applying for small business loans or business loans online is relatively simple and straightforward. It’s mostly a matter of filling out forms and providing bank statements.
• You’re not required to share your future profits with your lender. Lenders do not have any direct claims on the money you’ll make besides what you agree to pay them in fees and interest, as outlined in the loan agreement.
• A lender will not make any management decisions for you. The lender’s main interest is that you’re complying with the terms of your loan.
• A loan may provide tax benefits. Any interest you’re required to pay on a business loan may be deducted from your taxable income.

Disadvantages

• Maxing out lines of credit will have a negative impact on your credit score. The lower your credit score, the harder it will be to get a loan in the future.
• There’s a possibility the terms necessary for a loan won’t fit what you need or what you are looking for. In this case, you should focus on improving your credit score and then reapplying again in the future when terms are more agreeable.
• If your business constantly has cash flow problems, it’s not likely you’ll receive approval for a loan. Even if you receive approval, you’ll be asked to pay high-interest rates, and you may struggle with repaying your loan.
• Repayment can lower your cash flow. The money you pay back could have instead been saved for future investments.
• It’s not likely lenders will change or amend the terms of your loan if you ask. If they did agree to it, they would likely ask for things in return, like higher payments or more management in how you spend your cash.
• Lenders are not your friends or your business partners. If you experience any trouble, their goal will be to protect the money and your repayment.