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All About Small Business Loans – How to Get Them

If the business employs less than a hundred, is owned and operated independently, and not the market leader in the industry where it belongs, then it is considered a small business. These are some of the criteria of the U.S. Small Business Administration (SBA) defining a small business.

One of the most common problems of a small business owner is the lack of funds to maintain, run and expand the business. If you have this problem, then these frequently asked questions will guide you in making your business survive through the support of a business loan.

What is a Small Business Loan?

A small business loan is the type of loan that lends money or funds to a small business owner so he or she can operate the business. It is also made available for individuals who wish to start a business.

Small business owners may use the amount borrowed for the establishment, construction or renovation of the business, acquisition of the necessary equipment, and for operational expenses such as payroll.

While a small business loan refers to a loan for the business itself, the personal credit history of the business owner will strongly determine if the bank or lender would give its approval to the application. Thus, a small business loan is also termed as a personal loan granted to small business owners.

How to apply for Small Business Loans?

When you apply for a loan, your loan provider will look into your personal credit history. You, the business owner, should also be able to project a sense of deep commitment to your small business. The lender will gauge your willingness to put a portion of your personal funds to help the business prosper. Be prepared also to present a loan security or collateral such as a house or car. What’s more, your educational background and expertise are also important factors for your business to be granted the loan.

The small business owner is also required to submit a business plan. A business plan is a written proposal which details the nature of your business, marketing strategy and contains a financial report. This document should also include how the business will generate income and support its operational expenses in the coming years. Moreover, the business plan should be able to convince your loan provider that you can pay the loan within the stated date of payment through the profit realize from the business and its expected continuous growth.

Remember that lenders need to make sure that the business can survive to pay up the loan and that its owner is credible enough to guarantee that the business is well planned to prosper.

Where to apply for Small Business Loans?

You can apply for a loan traditionally, which means going to local banks and government funded organizations. Even your local cooperatives have facilities for small business loans.

You may also apply for a loan online. Online application for a business loan is easier and convenient for a small business owner. You no longer have to waste time scouting for the best loan arrangement in the market. All you need to do is visit various websites and compare the rate and application requirements. However, make sure that your target small business loan provider is credible to avoid problems later on. A national bank with online capability is the best choice.

First Step to Successful Entrepreneurship: 12 Ways to Cut Off High Business Startup Loans

When it comes to startups, the common problem that most entrepreneurs face today is the money to start a business. Being an entrepreneur is not easy, you have to take risks and move forward with optimism psychology. You need to think of ways by which you can obtain maximum output with minimum input. Well, that’s the basic rule of the business and widely followed by entrepreneurs all over the world. You need to be creative in what you do and innovative in your decisions. Few opt for business start up loans while few look for different alternatives. Bright ideas make a better future and some good initiatives can lead a foundation for you to become a successful entrepreneur. If money is scarce, that does not mean that you put your dream on hold, you always have better options to look forward. So, here are some creative ways to finance your business.

Steps to a Better future

• Sell your product to raise money – Well if you resale your product and find a suitable buyer, then you can raise funds for your business in an effective manner. No doubt there are many successful entrepreneurs all around the globes who started this way and once they complete their target, they expand their business with funds they collect.

• Support from family and friends – It is the traditional way and the most effective way in this contemporary world. You can convince your friends and family to invest or provide small business startup loan which may help you to implement your ideas better without any pressure. This way is much better than taking loans from any other alternative.

• Double Dipping – You can always start a side business to raise funds for your business startup. In this way you will not be under any kind of debt and burden and thus it is the safest way to start the business.

• Selling stuff – Well, sometimes it’s hard to sell out your stuff, but as Jarod Kintz said “Instead of burning the midnight oil, you should try to sell it”. Sometimes you have to compromise to achieve success. You can make good money out of it.

• Credit card – You can use a credit card to finance your money. This is an easy way, but it involves risk. If something goes wrong, then the interest rate goes up at a very high rate.

• Angel investors – It is one of the recommended methods and many leading companies like Google and Yahoo have used it. Angel investors give you the required amount to start up the business. You get a friendly environment and moreover a better and quicker way to deal with business.

• Microloans – You can lookout for various firms providing small loans for the young entrepreneurs. These firms are generally better than taking business startup loan from a bank.

• Get new order and deliver – There are a number of entrepreneurs who receive the order from the customer, but they are not able to supply due to lack of money for the production. There are some companies who provide loan in this scenario. With this you will be able to raise funds for your startup in a better way.

• Real estate – This is one investment which provides greater output if done after a research. Before investing your money, always do a little work to find out the current rates etc and do the right thing. With this you can raise money successfully without complications.

• Cut out liabilities – Well, it’s another creative way to earn good money. For example, you can rent your home for some time and raise a good amount of money by doing that. Many entrepreneurs have employed this way and were successful to earn enough money to start their business.

• Crowdfunding – It is a very popular way among entrepreneurs. In this you can make a good use of internet by finding people having similar thoughts on investing with small amounts. Collectively, these small amounts on adding up will provide you with a better alternative to startup your business.

• Financing by vendors – This is very helpful to obtain the material to sell your product. The manufacturers do not take any payment from you till your product is sold. In this way you get a better extension to sell your goods much efficiently.

After reading these 12 ideas, you must be very confident about your startup. But remember that things aren’t that easy as they seems. You need to work harder to achieve the best out of it. Moreover, just by visualizing ideas in your mind you won’t be able to implement them practically. You must be able to adapt according to the situations and work practically to achieve the requisite aim. Risk is always involved for young entrepreneurs, but that does not mean that you can’t do it. Overcome your fear and be creative and innovative and always ask yourself that do I have what it takes to become a successful entrepreneur?

Free help by SBA for Small Business Loans

Why should anyone be interested in helping you for free?

The government benefits if it gives small business start up loans and that is why it helps.

o Statistics show that small businesses number more than the big businesses.

o Small businesses employ more than 50 percent of the work force.

o Small businesses contribute to more than 50 percent of the nation’s GDP-Gross Domestic Product.

o Small businesses are the principal source of new jobs.

Starting a small business or expanding your small business is not easy. Expert guidance and help is given to you for free by SBA. The US Small Business Administration was established in 1953 and has business offices in every state. SBA works with thousands of lending, educational and training institutions nationwide. It does not provide grants but offers counseling. Government small business loans are offered to many entrepreneurs. Look up the web sites of the state economic development agencies to know if it is available in your state.

SBA is only a guarantor of loans offered by banks and other private financial institutions. The lending institutions that agree to terms of the SBA provide loans to small businesses through SBA. In case of inability of repayment of loan within the stipulated time; the SBA pays the lender the agreed upon guarantee amount, and the borrower has to pay the SBA the entire amount.

Can the SBA help you?

Small business is one that is independently owned and operated and is not dominant in its field of operation. SBA has regulations to determine whether your business qualifies as a small business. You could look up the SBA website or federal government regulations to find out if your small business startup loan or small business loan for expansion qualifies. Your business has qualified then the next question that any lender would ask you, is: Do you have a business plan?

Most lenders would require a detailed description of the business you are going to start up or expand. Look up the SBA site http://www.sba.gov/starting_business/index.html for planning options and counseling. The many things that SBA helps you is

o Writing a business plan

o Getting the loan

o Marketing

o Licenses and Laws

o Patents and copyrights

o Selling to government and abroad

o Hiring employees

o Buying the right equipment.

Notable among it various programs are Small business loans for minorities, Small business loans for Women, Small business loans for veterans and young entrepreneurs. The various small business loan programs offered by SBA are.

Basic 7(a) Loan Guaranty

This is the primary business loan program. It is offered to those who do not qualify for loans through the normal lending channels. The terms offered by SBA are more flexible. Valid loans are those where the proceeds of the loan are used for sound business purposes. The maturity is 10 to 25 years depending upon working capital and fixed assets. http://www.sba.gov/financing/sbaloan/7a.htm

Loan Prequalification

Low income borrowers, disabled business owners, exporters, rural and specialized industries are the target for this program. Bad credit small business loans do not fall in this category. The applicant has a credit merit then it is easier to secure the loan. http://www.sba.gov/financing/sbaloan/prequalification.htm

Certified Development Company (CDC), a 504 Loan Program

This is a variant of the Basic 7(a) loan to obtain real estate or equipment for expansion or modernization. http://www.sba.gov/financing/sbaloan/cdc504.htm

Micro Loan, a 7(m) Loan Program

This is available in selected locations in most states. The SBA stand as guarantor to organizations that provided the loans, technical assistance and management for small scale financing. Not-for-profit child-care centers can also avail these loans for working capital or purchase of inventory or supplies. http://www.sba.gov/financing/sbaloan/microloans.htm

Disaster Recovery

Home owners, Property owners in disaster areas qualify for this loan program. Term of the loan is 30 year and the rate of interest is below 8 percent for those who can obtain credit elsewhere and below 4 percent for those who cannot obtain credit elsewhere. http://www.sba.gov/disaster_recov/loaninfo/property.html

New Business Loans Guide for Small Business Owners and Entrepreneurs

It’s not the easiest thing in the world for a new business to obtain the money it needs to help get started. New business loans can be difficult to get unless you have excellent credit and a good plan in place. If you can get approval, you’ll get the proceeds you need for things like working capital, equipment, supplies, machinery, inventory, advertising, or maybe even real estate construction or commercial building rental.

One thing many lenders will expect you to do is determine your personal equity. How much of it will you be able to bring to the table? Lending institutions tend to require that you are able to bring 20% – 40% of the total loan amount you are requesting.

In the 21st century, there are many more options available for start-ups than the traditional loan from a bank. However, before you apply for any type of funding, you must prove that your company qualifies as a small business. Small businesses are usually measured by factors such as number of employees, number of years (under 2) in operation, number of employees, generated income, types of assets and their value, revenue, and so forth. Most traditional lending institutions require that you put of collateral and a guarantee that you will repay.

Your Credit Score and New Business Loans

If your personal credit score is very high, you might want to look into getting a credit card to use towards your business. The line of credit might not be enough to cover everything you need, but it’s a good start. There is no rule that says you have to get all of your funding from one source. There are a variety of microloans for which you might qualify, such as those offered by the SBA and other non-profit organizations. These types of new business loans can be used for the purchase of inventory / supplies, furniture, working capital, etc.

As for alternative start-up business financing options, such as grants and crowdfunding, you’ll want to put more of a focus on our business model as opposed to your credit score. These types of funding are worth looking into if you have poor credit. However, in order to impress crowd-funders, grant organizations, angel investors, etc… , you’re really going to have to come up with a great message and marketing campaign.

Once you get all of your documentation, files, financial records, financial plan, etc. together, you can start checking for new business loans at US Business Funding. This organization has 95% approval rates and offers flexible terms and payment options.

Various Types Of Loans Available For Business Startups

Getting financial help can be difficult for small businesses. So, loans are a great way out. Some of the loans are beneficial for startups whereas others are better suited for well-established companies.

There are various kinds of loans available these days, which we shall discuss below.

Bank Loans

For owners of small business who require a considerable amount of cash flow, bank loans are an excellent option because they usually have lower rates than any other type of financing. If any business owner is planning to avail loan from banks then they must provide complete financial information, a good business plan, and a guarantee. However, smaller local banks have easier underwriting for loans. When you are planning to take financial help from a bank, then you must take into consideration the processing time taken by banks.

Credit Cards

Many small businesses have been established with funding available from personal credit cards. This is because it is readily accessible cash, and moreover, personal credit cards are easier to get hold of than a business loan from a bank or elsewhere. This does not imply that it is the best choice for your startup or business.

When you are considering the merits of various types of loans you can avail, you need to think about interest rates which would apply. Credit cards naturally have a higher rate of interest than loans. What’s more, is making use of personal credit to support a business is dangerous. If at all the business you started fails, then you would be damaging all your credit and you will be left nothing much for your future.

Lines of Credit

Most of the banks which offer loans also offer lines of credit. The advantage of this type of funding for small business is its flexibility. It is good for additional cash flow when a particular business opportunity awaits you and you require funding. They can be easily availed in the form of credit card. By using a line of credit for various business expenses, you can keep track of the accounts used for business and for personal purchases.

Alternative Lending

You will find new players in the territory of lending funds for small business. They are called as alternative lenders. Alternative lenders provide loans to the owners in the type of quick and flexible funding.

Unlike banks alternative lenders use borrowed capital and make a broader range of advertisement like comments on social media sites, online reviews, and so on. This enables funding to be easily accessible, and most of the business owners will find out in no time if they are accepted. Borrowers usually pay a higher rate of interest in this type of funding. But, it is more advantageous for a business owner who is in need of quick cash.

So, if you are in need of funds to start your business, various types of loans can be what you can resort to.

Easy to Get Small Business Loans: 6 Tips for Applying for Funding for Your Company

Small business funding, unfortunately, isn’t easy to get for most people – especially if you don’t already have good credit. Typically, it requires a lot of legwork to get business loan. For some start-ups, owners often have to resort to getting a personal line of credit and using that to find the business. Easy to get small business loans really do exist, just as long as you prepare everything properly and look in the right place.

Here are a few tips to increase your chances of finding and obtaining a small business loan:

1. Get your personal credit report cleaned up. This is something that lenders will want to see. If you have poor credit, take the time to get it straightened out. You might even want to use credit repair services.

2. Create the best business plan possible. Consider this to be your “sales pitch” to funders. If you want as much money as possible from a lender, you can’t be secretive. You must specify exactly why you need the money, how much you need, and what it will be used for.

3. Keep everything as organized as possible. A wide range of documents may be required, including tax returns, annual revenue, and bank statements. Know which documents a potential lender will require from you ahead of time.

More Tips for Easy to Get Small Business Loans

4. Determine the best type of lender. There are many types of organizations that offer easy to get small business loans, including banks, online lenders, non-profit micro-lenders, “angel investors”, credit card companies, and more. Use a bank when you already have good credit and can provide collateral. Use online lenders if you lack collateral and need the funding as quickly as possible. A micro-lender might be ideal when you have a company that is so small that it doesn’t qualify for traditional funding.

5. How long have you been in business? If your company is under one-year old, you’ll have difficulty If you have a start-up, consider solutions such as personal loans, angel investors, or even online crowd-funding if you can come up with an innovative marketing message.

6. Find out how much the payments will be and make sure you will absolutely be able to pay them. Different lenders have different terms and different interest rates. You might be required to pay just one time a month or two times a month.

If you need a fast business loan, US Business Funding is a great place to start your search. This site has been featured in publications such as Forbes, Business Insider, CNN Money, and other such organizations. US Business Funding reviews are primarily positive.