Small businesses may need additional funding from time to time. But the most obvious question is where to get the money. This is where short-term small business loans come into play. They’re an effective way to quickly adjust your business to new conditions on the market.
What are Online Loans for Small Business?
It’s easier to run a business nowadays than ever before. Modern means and technology make it possible even for somebody without any business experience to start a business of his own.
But the main issue is money. To start making money, first, you need to get money. Simple as that.
Small business loans grant you a solution to the problem. There are not only a huge variety of options for anybody, but there are also options even for those of you that may have a bad credit score! All you need is a little know-how.
It’s pretty common for a new business to apply for them. But how should your applying be done in order to qualify for a loan? Where can you find out about this?
And this is where our article comes in.
How to Get a Loan for Small Business Owners?
In a nutshell, there are two types of loans: shorter-term and longer-term ones.
The short-term ones are for those who are interested in little changes or purchases, such as buying new inventory, starting a marketing campaign or anything that needs little time and effort.These loans range from 3 to 24 months.
There are also long-term business loans, which name says it all. These loans are expected to range from 1 to 5 years, and when they’re taken some grand changes happen, like great updates or even moving to absolutely new locations.
So, now when we know what the types of loans for small businesses are, perhaps it’s time to proceed to qualifications and requirements that you need to fulfill in order to get your short-term business loans.
Every lender has his own demands and the way of doing things, but the general principles are basically the same:
- Firstly, everybody likes somebody with experience so that they knew their money will come back. Mostly, it’s expected of you to have from 1 to 2 years of business experience
- Secondly, you should make sure you earn enough. That’s another indicator for the lender for him to give you the money. Your perfect annual revenue should be from $100,000 to 250,000
- Thirdly, lenders pay attention to your personal credit score. This is perhaps the most important factor. It is expected of you to have it from 500 to 650. But don’t worry, if you have lower. Further, in the article, there is a solution if this concerns you
- Last, but not least – your industry matters. Every lender has his own “not to give” list, but mostly this list contains financial services, housebuilders, and real estate investors. So pay attention to that before starting negotiations
Getting a Small Business Loan Even with a Bad Credit Score
Bad Credit Score and need for a loan may hinder your application to get some easy small business loans, but that does not mean that it’s impossible.
There are many lenders who gladly accept even those who have not a very impressive credit score. Of course, it doesn’t mean they’ll gladly give you quick small business loans, but if you persuade them – they will.
So don’t be shy and tell the lender how everything is. Honesty is a good way to start a trustworthy cooperation.
Needless to say, that as in any aspect of our lives, communication is a king. The way you communicate with people and find a way to persuade them is important.
There are also ways of improving your credit score, but that’s an information for another article.
But here are some tips you may look through before you choose a financing option:
- The lower your credit score is, the bigger the possibility of having a higher annual rate is. It influences interest rate and fees on your loan, so keep that in mind
- If there are customer invoices you need to pay, you may get cash through invoice factoring or financing. And this is perhaps the most influential factor since when lenders check your credit score, their approval is mainly based on your invoices value
- You could wait and improve your personal credit, and then get better options with far better rates
Small Business Loans for Women
Everyone who is a business owner sometimes needs additional finances, this is what helps you to grow.
Yet there are some additional obstacles for female entrepreneurs as well. The biggest one is the fact that traditional banking institutions don’t give credit access to women.
So here are solutions for women:
SBA or Small Business loans are loans that government guarantees. They provide low rates with long terms of financing and because of that are considered to be the most advisable for business women.
Term Loans are also loans that offer you low rates and a long period to pay and are mostly lent by banks. It is said “mostly” because there are also many alternative lenders that do it at the faster time.
Business Lines of Credit have a good advantage due to the fact that you only pay interest on funds you draw. And when you pay back, your credit line gets refilled to the original amount.
How to Apply for a Loan Online and Get Financing for Your Business
This is perhaps the biggest advantage of online loans – the process to get them is simple and easy. All you need to do is to fill a form which is created in a way that everyone will have no problems in understanding and be filling it in.
Of course, you don’t need to have all the documents which are usually required at banks, but there are some you should keep ready:
- Social Security number
- Business tax ID
- Connection to a business bank account (depends on the lender who may require it or not)
- Financial statements may be requested if you have a plan for a big loan size
Another good advantage of online small business loans is the fact that loan applications are reviewed very fast. You get the response in an hour and in a matter of days money arrive at the bank account.