Small Business Loans: What To Know
As a small business, there are many risks that an owner has to take. Business loans are important and vital when you’re starting a new startup business or need additional money to expand an existing booming business. Money from small business loans can be used to secure inventory, make important purchases such as equipment, expand rental space, increase workforce, and cover a variety of other expenses a small business might incur.
The Small Business Association (SBA) works with lenders to provide loans to small businesses that may need it. While it doesn’t work to provide money directly to small business owners, it assists in the process.
Factors That Can Affect Your Small Business Loan Approval
Bad Credit History: Most small business loan lenders use your credit report to determine your creditability. If it shows a lack in your due diligience to pay debt back, you might not be approved for a small business loan or limited in the amount you can borrow.
Limited Cash Flow: The amount of cash flow you have on hand is evaluated as it determines how much case you have on hand to pay back a loan. This is normally one of the first things small business loan lenders look at when evaluating your application for a small business loan.
No Business Plan: If a lender sees that you are lacking a solid business plan, you may be passed up for a small business loan. Make sure to put in the time to create a thorough and well thought out business plan to present to the small business loan lenders.
Applied Too Many Times: Small business owners should be careful to not apply for to many small business loans. Make sure you have everything you need when you first apply for a small business loan.
Small Business Loans for Times in Need
Nationwide and global events can seriously affect a small business compared to a bigger business. In times of need, many small business owners look to small business loans. Governments contribute more funding to small business loan lenders to help business owners survive national or global disasters or pandemics. In 2020, the United States government promised to ensure that the Small Business Association is fully funded to offer small business owners loans to stay afloat during the Coronavirus economic shutdown. For more information about the SBA, check out their helpful website for more resources.
Small Business Disaster Loans (SBA Disaster Loans)
Are you a small business that is suffering during a national disaster or pandemic? Luckily, there are multiple resources out there to help struggling small businesses that suffer hardship during a disaster. The SBA (Small Business Administration) works to provide low interest loans to businesses in order to provide disaster relief to those that are falling on hard times during a disaster. These types of assistance are also available to homeowners and renters as well.
Small Business Grants
In addition to small business disaster loans, there are small business grants available for small businesses during a declared disaster. This operates by the SBA working with different organizations to provide disaster relief grants to small businesses that may need it. Unsure who is eligible for a small business grant? Check out this helpful list on the SBA's website to see what programs are eligible to receive a small business grant.
Small Business Loan Providers
Unsure which lender to go with when considering an application for a small business loan? Compare some of these major small business loan lenders below.
Lending Tree: This small business loan lender does not require a minimum credit score and praised for it’s fast turnaround time.
Loan Builder: This lender is a party of the PayPal services and has a minimum credit score of 550.
Kabbage: Kabbage small business loans offers a card and does not require a minimum credit score.
OnDeck: The minimum credit score for OnDeck is 600 and time in business must be at least 12 months.
Reliant Funding: This small business loan lender does not require a minimum credit score and requires that the business must have been in existence for at least 12 months.
There are a variety of small business loan lenders to compare, make sure to compare the pros and cons of each.