Finance Nations
Is your small business in need of a loan? Don’t worry, you’re not alone. A recent study found that more than half of small businesses rely on loans to grow their businesses. So how do you go about getting a loan for your small business? Here are a few tips to help you out.
If you’re a small business owner, there’s a good chance you’ve considered taking out a loan to help finance your operations. But what are your options when it comes to getting loans for small businesses? And how do you know which one is right for you? In this post, we’ll break down the most popular loan types available to small businesses, and offer some tips on how to make the process as smooth as possible. Let’s get started!
But before we proceed, what is a small business loan and why do you need it?
A small business loan is a financing method whereby business owners obtain money for setting up a small business or expanding an already existing small business. This business loan gives you access to capital that you can use for either capital increment or business expansion such as technology, building, staffing, and more.
- Are you eligible?
Finding out if you qualify for the loan who’d mainly depend on the type of small business loan you are applying for and the lender. However, when applying for a loan there are some vital things you’d put in place. Which are;
1) Bank statements.
2) Collateral.
3) Business plan.
4). Business owner’s personal information and background.
5). Loan purpose.
6). Business Credit Score.
7). How long is the business?
8). Business returns( Annual sales).
9). Legal documents of the business(Such as business license) among others.
Terms, interest rates, and conditions vary from one lender to another. As a small business owner, you have the option of comparing the advantages and downsides of every situation. Hence, selecting the best fit for your small business.
- How to find the best small business loans for your needs.
When considering taking a small business loan, it’s important to check out some information such as the terms. This process is a vital part when applying for business loans, you would have the option of comparing different interest rates of loan lenders and choosing the option suitable for your small business.
The best business loan for your business should be favorable, the interest rate should be reasonable and be the best fit for your business.
Hence, to choose the best small business loan for your business you should consider the requirements, interest rate, loan amounts, among others.
- Applying for a small business loan.
- Be prepared to make a business plan.
As an entrepreneur, be prepared to draft and make a comprehensive business plan that contains credit Score, market strategies, budget among others.
- Find out if you qualify for a loan.
As business owners, before proceeding with the application process find out if you are eligible for the loan or not. Know the requirements of getting the loan.
- Prepare your financial statements and tax returns and get credit references from banks, suppliers, or customers
- Know the terms of any loans before signing anything with small business loan lenders.
- Seek advice from experts in the field to help with your business plan and finances.
- Types of small business loans.
There are different types of small business loans according to varieties of business needs. Below are three common types of small business loans includes;
1) Equipment loans.
Business owners can secure a loan, to purchase equipment for their businesses and the equipment can be used as collateral. However, the lender takes possession of the equipment if you fail to pay.
2). SBA Loans.
The interest rate on Sba loans is much lower, they are guaranteed by small business administration. Hence, the approval takes a long time and the application process is much.
3). Conventional loans.
These are loans that small business owners can take and payback after a given fixed period. The interest rate of these types of loans is usually fixed.
- Below are the 5 best small business financing options, you could choose from, let’s go.
1). Lendio
A loan matchmaking company, interesting right! This company is one of the best business loan companies, the best part is that it connects small business owners with the best fit for their businesses.
At lendio, the company finds the right sort of financing for you, all you have to do is write who you are and what you want. That’s all, the company connects you with the right lender, you are presented with various options to choose from, amazing! right? plus, the services are absolutely free!
Lendio offers a variety of loan types which includes;
- SBA loans.
- Equipment financing.
- Business credit card.
- Start-up loans.
- Short-term loan among others.
2). Kiva
Another suitable loan option for small business owners who would like to borrow a considerable amount of money. Plus, the company offers a 0% interest! Amazing, right? To reach people all over the world, kiva partners with local organizations.
It’s a microlending site that works by uploading stories and pictures of each person who applies for a loan, the lenders can then select based on their preferences mostly on a human level. kiva is supported by grants, governments, donations, among others. How kiva works; Kiva lenders dispatch funds to kiva, the company then transfers them to the borrower (no interest is added). When the entrepreneur pays back the money, the lender can decide to withdraw it or lend it out again.
3). Fundbox
This loan option offers business owners lines of credit and offers to fund the next business day. Fundbox makes it possible for business owners to get prequalified online with ease. It offers small businesses lines of credit, providing them with funds to grow their business.
Fundbox is perfect for small business owners, or start-up business owners. The application process is quick and helps business owners maintain cash flow. With a fund box account, business owners are required to link their business accounts with the fund box account. A credit line is then determined by Fundbox, offering small businesses intuitive business credit access.
4). Ondeck
This is another loan option that offers fast funds, it is particularly the best option for small business owners who need fast access to finances. Ondeck offers fast funds and the application is pretty easy.
With ondeck, you get access to funds for your business, such as; equipment purchase, business investments among others. Plus, you get to able for another loan, when you pay half of the first loan. Sounds good, right? Ondeck also provides credit lines use for inventory management, payroll consistency, among others. Ondeck is fast and easy, what are you waiting for?
5). kabbage
This loan option is favorable because of its flexible payment and fast funding options. Kabbage provides small businesses access to funds using an automated lending platform. Kabbage makes use of a free tool to help small business owners predict and determine the cash flow, this tool is known as Kabbage Insights.
Considering factors such as the history of business, credit score, transaction percentage among others, kabbage provides lines of credit to business owners.
- What are the benefits of getting a small business loan?
Small business loans are the most popular financing option among entrepreneurs. Hence, the benefits of getting a small business loan are;
1). Lower interest rate; Business owners can get a low-interest rate from lenders or commercial banks especially business owners with good credit Scores.
The interest rate will largely depend on the entrepreneur’s credit score, the amount borrowed, among other factors.
2). Small businesses can get access to large amounts of funding.
3). Access to different loans.
Small Business owners gain access to varieties of loans for different needs.
4). Tax benefits.
5). Convenience.
They are different loaning organizations that have quick and easy processes.
6). Variety of options.
- The process of applying for a small business loan.
In this article, we have explained small business loans, the benefits of business loans, types of small business loans, financing options. So now, let’s look at the process of applying for a business loan.
Here are four major processes for applying for a small business loan.
- 1. A decision on where to apply for a business loan.
Commercial banks and online loan lenders offer loans to small business owners. As a business owner before selecting from the different financing options, you should consider when you need the loan and the type of loan you want.
2). Get all the requirements for the application process.
Each lender requires different criteria for small business loan applications. They mostly include the business legal documents such as business license, business and business owner’s information among others.
3). Review your application process.
Before proceeding with your application, get an expert to look over your application process. Double-check your application and make sure it includes all the requirements and is presented in the proper format.
- 4. Follow the instructions for the financing option chosen.
After reviewing all the requirements, the process you’d follow when applying for the business loan will majorly depend on the lender you have chosen. You could apply online or even at a branch.
- Conclusion.
Financing your small business is vital and choosing the suitable small business loan option for your business is as important. Getting the right funding for your business shouldn’t be difficult, especially if you follow the context of this article.
Hence, the need to follow the right process to gain access to the right funding option for your business. This article explains all you need to know about small businesses loan and more. Follow the appropriate procedure and you’d have the funds you need within a short period.
