Sometimes entrepreneurs discover that owning a business is similar to riding a seesaw. They feel on top of the world when their business runs smoothly but are unhappy when it slows down. All the same, most business owners agree that having a business is a rewarding experience.
They also acknowledge that they need money to grow their businesses and are uncertain about the best way to secure funding.
Finding the best
could determine whether your business grows or stagnates. For that reason, this post explains how small business loans work and how to get the funding you need.
Small business loans are a smart choice
Having a surplus of working capital enables you to reach your business goals. And a small business loan gives you that surplus of capital.
With it, you can buy:
- business equipment
- transfer your operation to a larger physical location
- purchase additional inventory
- and many many more alternatives
Also, as you borrow money, you build a credit history for your business. Therefore, lenders have more information to consider when you apply for future loans.
What do you need to apply for a loan?
Requirements to apply for a small business loan vary per lender. But what all lenders want to see is evidence that you are able to repay the loan.
Generally, most small businesses must have operated for at least 9 months, generated an X amount of revenue per year, and have a competitive FICO score. Likewise, your business should be current with your creditors and not had a bankruptcy in the last 12 months.
Some lenders require collateral to secure the loan and some don’t.
What can the funding be used for?
Once you secure funding, lenders may restrict the usage of the borrowed money. For instance, some lenders don’t lend money for you to invest in real estate, car dealerships, and adult entertainment.
However, you can use the money to hire employees, purchase furniture and fixtures, and invest in the latest technology.
How small business loans help your business thrive
As a business owner, you can use the funding to buy what you need to increase your business revenue. Without needing to dip into your existing working capital, you can shore up weak areas in your business that contribute to stagnation.
With an improved cash flow, you’re in a position to make strategic investments such as upgrading equipment or marketing your products and services to stay competitive.
Lending options to consider
Small business owners who already have checking and savings accounts with their local banks also fund their businesses through these financial institutions. Why? Because they increase their chance of getting approved when compared with contacting a national commercial lender.
As a member of a credit union, you can apply for a loan with them.
If you don’t qualify for a traditional bank loan, online lenders offer microloans and small business loans in amounts ranging from $5,000 to $400,000. The loan process is convenient and allows borrowers to receive funds in 5-10 days.
Another popular lending option is an SBA (Small Business Administration) loan. The organization partners with lenders, community development organizations, and micro-lending institutions so lenders take on less risk. Consequently, borrowers have an easier time to get financing.
Get the money you need
Getting a small business loan can put your business on a sure foundation and a trajectory toward success. With funds in hand, you can make strategic investments to increase revenue and plan for future growth.
We’ve removed the uncertainty about how small business loans work so you can move forward confidently. So why not apply for a loan today and join other entrepreneurs who got funding and succeeded.
What would you use a business loan for?
