Your Guide for Getting Small Business Loans
If you want to start a business, build an idea, or grow a garage enterprise, you may choose to obtain small business loans. Knowing what to expect and being armed with the necessary information can mean the difference between failure and success. Here is a couple of things to consider as you prepare for your meetings:
What Type of Loan Do You Need?
There are many types of loans available to the small business owner. Before you meet with any lenders, be sure you know what type they offer and what is typical of the specific type of lending they do. Here are just a few lenders you may consider:
- SBA loans: Also known as Small Business Administration loans, these are backed by the government and have low-interest
- Working Capital loans: Used to finance the daily business operations, these loans are unsecured and tend to be very short term.
- Term loans: Set for a specific amount of money, these loans are frequently used for capital expenses and business operations. Interest payments are made monthly, and loans typically must be paid within three
- AR loan: Also known as an Accounts Receivable loan, it is secured by your company’s accounts and paid as they are.
- Line of Credit loan: Accessed as needed up to the allowed cap, this loan allows cash flow and unexpected expenses to be dealt with easily.
Which Lender Should You Choose?
Many types of lenders have come forward to allow small businesses to borrow in recent years. With so many available and with so many different types of small business loans, knowing who you are talking to can let you prepare to meet with them. Here are a few:
- Commercial Banks
- Credit Unions
- Community Banks
- Lending Sites
- SBA Backed Banks
- Online Lenders
Why Do You Need the Loan?
Before meeting with a potential lender, you may want to get your paperwork in order and check your credit/risk profile. Include your financial statements for the past two to three years, and accounting records for at least one year. Also, be prepared to answer questions on your cash flow and debt-to-equity ratio.
Are You Prepared to Meet with Your Lender?
With so many finances available from so many different lenders, obtaining small business loans can be an investment in time and energy. Anticipate what the lenders will need, and your chances of getting your loan may greatly improve. You worked hard to grow your business, take the time required to be prepared to get the loan.