How to Get a Small Business Loan
It is always a good idea to run your business using existing cash flow. Sometimes, however, a small business loan can help propel your business forward. One of the best benefits is that it can even out cash flow when payments come in late.
What Are Your Options When Seeking a Small Business Loan?
There are two types of loans. Learn more about each to decide which is right for your business.
A small business loan is a set amount of money you get from a lending organization. Businesses usually apply for this type of small business financing for capital purchases or long term initiatives.
You can only use the money for the exact purpose you list on your application. It’s also important to note that you will begin to pay this money back almost immediately, whether you use it or not.
Then there is a line of credit. Businesses typically choose this option to help even out uneven cash flow and to pay expenses. For example, things like payroll, rent and paying important suppliers are things that need your urgent attention and they only take cash.
Two Options for Getting a Small Business Loan
Commercial bank or an alternative lender
Ten years ago, a commercial bank was the only option for those seeking a business bank loan. Nowadays the majority of small businesses go to alternative lenders.
Alternative lenders began giving small business loans during the 2008 financial crisis. This is because banks were not really approving loans during this time.
Downsides of Commercial Banks for Getting a Small Business Loan
Commercial banks receive funds from the government and deposits. As a result, they must answer to the government when loans go bad. Therefore, they insist that all small business express loans have 100 percent collateral to back them up. Also, if you are applying with a commercial bank you should know that it will take a few days of continuous time just to fill out the application.
In addition, commercial banks also have very high credit standards. If you don’t have at least a 750 credit score, you may as well not even bother. Worst of all they will take 3-6 months to give out a small business loan.
Why Alternative Financing is better than a Small Business Loan
Some people believe a commercial bank is cheaper but this is not always the case. It really depends on what you are looking for.
Alternative lenders often do not require collateral. More importantly, your business or nonprofit can have fast business financing in place in days instead of months.
An alternative lender usually has an online application and approval decisions are made in minutes. This is because alternative lenders use private money so they have the final word on whether a company is eligible for quick business lending.
Where Should You Go for an Alternative to a Small Business Loan?
Best recommendation: If you are in a hurry and don’t have the collateral then an alternative lender is a better decision. The most beneficial choice is a business cash advance company, like Financing Solutions (www.financingsolutionsnow.com).
At Financing Solutions, your business or nonprofit can get a line of credit up to $100,000. You can use this funding for any business purpose and pay it off all at once or over time.
All you need is at least $300,000 in yearly revenue to be eligible for their fast business cash. You can start by completing a quick online application. Every company should have a business line of credit, just in case.