Top 10 Business Loans Lenders
- $5K in monthly revenues
- 6+ months in business & use accounting software
- No minimum credit score
- 12 months in business
- Min. Credit Score: Variable
- 12+ months in business
Business Loans: What You Need To Know
It s not unusual to need a business loan to cover expenses you can t handle with your current budget. Seasons and circumstances change, impacting daily cash flow and your ability to support continued growth. Before approaching a lender, educate yourself on the types of loans available, the terms you can expect, and what documentation will be required to determine eligibility.
Applying for a Small Business Loan
When seeking financing for growth or to cover gaps in cash flow, small businesses have a surprisingly easy pathway to funding thanks to the tailored loan solutions available. Unlike traditional loans extended to enterprise level companies, small business loans are easier to access, quicker to apply for, and have friendlier terms for repayment.
Finding the right loan is not a problem thanks to the rise of financial services providers and new companies that offer quick funding and straightforward approval processes. Additionally, the requirements many companies set for approval, such as lendio, tend to be much accommodating for small businesses.
Unlike enterprise-level loans, which are usually extended by large banks, small businesses have different options when seeking financing which can be much more beneficial. Aside from banks, small companies can take advantage of federal loans such as Small Business Administration loans, work with credit unions, or even consider online alternative lenders.
For these online lenders, working with smaller companies is more useful considering they can be growth partners and create lasting working relationships. Additionally, these lenders often provide different forms of financing outside of traditional loans, which are better suited for some businesses. Services such as invoice factoring, lines of credit, and equipment loans can help small businesses more as they provide a targeted influx of capital. These financing types offer flexibility and let smaller companies take loans without putting themselves at a disadvantage.
Generally, lenders are looking for small businesses that meet the following requirements:
Companies whose owners have good to excellent credit
A proven flow of income that can be used to repay the loan, or financing extended
More than one year in operation, although this may vary from lender to lender
In some cases, proof of collateral that can be used to secure the loan
A plan for investing the capital being extended
Requirements will vary between the different alternative online lenders, but small business loans are a great way for expanding companies to find the funds they need to sustain growth and help them reach performance targets.
How Do Business Loans Work?
Acquiring a business loan can be more difficult than obtaining funding for other purposes. Business loans represent a big risk to lenders because of the volatility of the consumer market. Although marketing analytics are making it easier to predict customer behavior, many unknown variables still affect business cash flow and profits. This is another reason why banks want to know exactly what you plan to do with the loan should your application be approved.
When applying for a loan, you ll discuss terms, interest rates, and other details with the lender. It can be a long process requiring a lot of detailed financial information from both personal and company accounts, and you ll likely need to speak with more than one lender to find the right fit.
Remember, a loan is a binding agreement for a given period of time, and once you sign the documentation, you re committed to paying the money back according to the agreed-upon terms. Make sure you know exactly what you re getting into before the loan is finalized.
Questions to Ask About Business Loans
Because of the time and expense involved, consider whether you actually need a business loan and if it will benefit your company before applying. If you determine that a loan is necessary, prepare a list of questions to bring along when you compare loans from different lenders. Your list should help you narrow down your choices to banks and other lending institutions offering options closely aligned with your business needs. You may want to ask:
If the lender has experience lending to your type of business
How much the lender typically loans to businesses of similar size
Who is in charge of application review and approval
What documentation is required to apply for a loan
How long a typical application-and-approval process lasts
Whether interest rates are fixed or variable
If there s a penalty for paying the balance off early