When it comes to business loans, there isn’t a single loan that is ideal for every business. Because each business varies in size and industry, your business loan needs to be generous enough to help your business achieve a specific goal but manageable enough so that your business can pay it off. Here are some tips to help you cover all the options to find the best loan to meet your business needs.
Are You Shopping Around?
Unfortunately, over 80% of small business loan applications to traditional banking institutions are denied. Compared to a mortgage, auto, or large business lending, small business loans are a riskier investment for banks. Any small business loan applications that are approved will most likely have higher interest to offset the risk and the smaller, or even lack of, collateral to back up the loan.
If you have been rejected by your bank for a small business loan, there are other non-traditional options to finance your operation. Banking institutions are not the only type of institution capable of loaning out money. The Business Model Institute says non-traditional financing options such as credit unions and community investment funds are available to assist local businesses in their community. Here are several more non-traditional options to obtain business financing.
- Local Credit Unions
- Community Investment Funds
- Federal and State Government-Backed Small Business Loans
- Private Entrepreneurs
- Asset/Collateral Based Financing
- Credit Cards
- Merchant Cash Advances
Are You Leveraging Your Assets?
If you already have an established business and are looking to expand the size of your business or to develop new product lines, you may find that you need a loan to cover the acquisition of new assets. Small businesses normally do not have enough cash on hand to fund large business expansions. If you are looking into financing your expansion by leveraging your assets, many other factors can come into play such as your current amount of leveraged assets, company size, income, and age of business. Your line of credit is usually determined by how much more debt your business can take on. As Visible Equity explains, certain qualitative and environmental factors will allow you to qualify for more money or a lower interest rate even under the new CECL model.
Are You Familiar With Different Types of Business Loans?
According to G2, there are many different types of business loans available to small business owners such as term loans, SBA loans, fixed asset loans, bank line of credit, and others with varying rates and payment terms. It is essential to apply for the correct one to ensure loan terms that you are capable of fulfilling.
Funding a small business can be a challenging endeavor as the risks are higher, both for you and for lenders. But sometimes seeking a loan is necessary to take your business to a higher level. If traditional banking institutions are unable to approve your application, there are other options for funding. The key is to search for a loan with a term and amount that you can reasonably payback.
Inquire with Capital For Business today to see about getting the loans you need to grow your business!