5 Things You Need To Know About Small Business Loans

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Acquiring a small business loan is important for expanding your business. The thought of borrowing money often makes small business owners nervous, but as long as you’re organized and understand how loans work, then you’ll be fine. Here are five things you need to know about small business loans to help get you started and ease your nerves:

1. Lenders Want Reassurance That You Can Pay Back the Loan

You might think that if you appear to need the loan, then lenders will be more likely to approve your request. However, the opposite is true. Lenders look for signs that you’ll be able to pay back the loan. If you look like you don’t need it that badly, then you’ll be more likely to receive a loan. This means to dress professionally, maintain good cash flow in your business, and have a good credit score.

2. Typical Documents You’ll Have to Show the Lender

When applying for a small business loan, lenders will often ask to see your business plan, cash flow, profit and loss statements, and balance sheet. These important documents will show them how capable you are of paying back a loan, how risky lending to you is, and how much money they can afford to lend you based on your ability to pay it back.

3. Small Businesses Tend to Seek More Than They Actually Need

Carefully scrutinize your finances and determine how much you really need to borrow before requesting a loan. Businesses tend to ask for more than they need, so place thought into the amount you ask for first.

4. If You’re Rejected for a Small Business Loan, Address the Problem

Another important thing to know about small business loans is if you’re rejected by one lender, you will likely be rejected for the same reason by subsequent lenders. If you’re rejected the first time you make a loan request, ask why it was rejected and then fix that problem before sending out another loan request.

5. Always Apply for SBA-Backed Loans

SBA-backed loans have lower interest rates than other business loans. Therefore, as a small business owner, you should always apply for an SBA-backed loan. You won’t have as much money to pay back. Interestingly, some businesses that aren’t small can sometimes apply for an SBA-backed loan, so don’t forget that little fact if your business grows larger.

To be approved for a small business loan, you must have your important financial documents in order and a good understanding of how much you truly need to borrow and a plan for paying it back. You don’t want to borrow more than you need as it will mean more money that you need to pay back. Worse yet, you don’t want to get yourself into a situation in which you don’t pay the loan off on time.

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Where To Find The Best Small Business Loans For Any Credit

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Small business loans can be hard to come by, especially for business owners who have recently opened their doors to the public or those who face credit history challenges.

Use the following list of best small business loans for any credit if you’re currently struggling with obtaining financing:

SBA Loan

SBA loans are insured by the federal government and underwritten by private banks. They come with the longest repayment terms and offer low, affordable rates.

Business Lines of Credit

Business lines of credit are given to small business owners from banks. Lines of credit are a great alternative to traditional credit cards. Rates can vary up to 25 percent for less than perfect credit.

Merchant Cash Advance

Merchant cash advance is a service used mainly by those with poor credit histories. A percentage of a company’s credit card receipts are taken as payment for the loan, and rates run from 1.5 percent to 2 percent for cash advances.

Invoice Financing

While not very well known, invoice financing has proved to be a useful funding tool for many small businesses. The lender will loan the business a certain amount of money and use a future invoice as collateral for the loan. When the invoice is paid, the bank calls in payment for the loan. Rates can vary for this type of financing up to 3 percent per week.

Term Loans

Term loans are excellent options for businesses who need cash fast. Banks normally underwrite these loans for repayment terms as short as one to two weeks. Some banks will allow businesses to pay back this type of loan for a term of up to one year.

The type of loan you choose for your business will depend on your particular financial needs. Always carefully compare your options before making a final decision.

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4506 Transcripts News – Meet The Team

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A technology and service leader in tax verification, 4506-Transcripts.com is headquartered in Walnut Creek, California, and—to accommodate other U.S. time zones—serves clients from 5:00 am to 5:00 pm Pacific time each business day.

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Small Business Loan Programs

2015-02-26-financesandbusinessloans-thumbThe Small Business Administration is a government agency that is tasked with assisting small businesses across the United States. As part of this mandate, the agency offers a variety of small business loans that can be used for a variety of purposes:

The MicroLoan Program

This loan program is geared towards small businesses who need to cover short term financial needs and certain small businesses who’s main goal is to provide child care services.

Small businesses use the MicroLoan program for a variety of reasons, including:

  • Inventory
  • Supplies
  • Furniture
  • Real Estate
  • Equipment

These types of loans must be repaid within 6 years.

Disaster Loans

Disaster loans are provided to small businesses who are in need of emergency funds and have been affected by a natural disaster.

Some of the more common uses for a disaster loan include:

  • Repair of real estate
  • Equipment replacement
  • Inventory replacement

Equipment and Real Estate Loans

This type of loan is granted to small business owners who need to purchase fixed assets, like real estate or equipment.

Equipment and real estate loans come with a variety of qualifying and repayment requirements, depending on the needs and credit profile of the business.

General Small Business Loans

Also known as the 7(a) Loan Program, general small business loans are very common among small businesses.

General loans can be used for a variety of reasons, including funding the initial startup costs of a business, expanding to new locations, hiring employees, acquiring other businesses and more. There is no minimum loan amount requirement and the maximum loanable amount is $5 million. Qualifying for the loan will depend on a variety of credit, business and asset factors.

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Where To Find The Best Small Business Loans For Any Credit

banks-business-loansSmall business loans can be hard to come by, especially for business owners who have recently opened their doors to the public or those who face credit history challenges.

Use the following list of best small business loans for any credit if you’re currently struggling with obtaining financing:

SBA Loan

SBA loans are insured by the federal government and underwritten by private banks. They come with the longest repayment terms and offer low, affordable rates.

Business Lines of Credit

Business lines of credit are given to small business owners from banks. Lines of credit are a great alternative to traditional credit cards. Rates can vary up to 25 percent for less than perfect credit.

Merchant Cash Advance

Merchant cash advance is a service used mainly by those with poor credit histories. A percentage of a company’s credit card receipts are taken as payment for the loan, and rates run from 1.5 percent to 2 percent for cash advances.

Invoice Financing

While not very well known, invoice financing has proved to be a useful funding tool for many small businesses. The lender will loan the business a certain amount of money and use a future invoice as collateral for the loan. When the invoice is paid, the bank calls in payment for the loan. Rates can vary for this type of financing up to 3 percent per week.

Term Loans

Term loans are excellent options for businesses who need cash fast. Banks normally underwrite these loans for repayment terms as short as one to two weeks. Some banks will allow businesses to pay back this type of loan for a term of up to one year.

The type of loan you choose for your business will depend on your particular financial needs. Always carefully compare your options before making a final decision.

Posted in Small Business Loans | Leave a comment