How to Get a Small Business Loan Through Different Sources of Funding

When you are looking for a small business loan, it is important to have a solid understanding of the different sources of funding available. Here are some examples of where you can look: Banks, Microlenders, and the Funding circle. Before applying for a loan, make sure you understand the rules of the lender’s lending policies. They will have different requirements, but all three will help you get a loan that is right for your needs.

SBA 7(a) loans

Applying for an SBA 7(a) loan is easy, but there are certain things you should know. First, the amount of loan you need is important. The amount of funds will determine the specific use for which the loan can be used. Some allowable uses are operational expenses, refinancing high-cost debts, hiring employees, supporting marketing costs, and buying land or other real estate. You can’t use the funds for equity, delinquent taxes, or funds held in trust.

When applying for an SBA 7(a) loan, keep in mind the maximum loan amount, repayment terms, and guaranty fees. If you plan to borrow more than $25,000, you’ll need collateral. Some lenders require a personal guarantee from business owners with a 20% ownership interest in the business. The SBA 7(a) loan program has several different pilot loan programs that you can apply for. Some of these programs last for five years, while others last for only a year.

Microlenders

If you want to know how to get a small business loan through micro lenders, you need to prepare a business plan. These plans will help microlenders determine the strength of your business model and your seriousness in expanding it. A business plan outlines the goals of your business, who your key stakeholders are, how you intend to reach your customers, and so on. Although a business plan is a formalization of existing information, it is an essential component of the application process and a good one will help you qualify for a loan.

Microlenders are nonprofit organizations with an interest in helping disadvantaged entrepreneurs access capital. These organizations focus on mission-based entrepreneurship and provide free business training, mentoring, and assistance. The application process is quick and simple and will vary depending on the microlender you choose. It is important to understand that microlenders may only be willing to lend to specific industries or demographics. Those with a strong business plan can have their applications reviewed and approved quickly.

Banks

When you want to start a new business, getting a bank loan might seem like a tough task. Many banks require that small business owners have been in operation for at least a year, and some even require that they have a minimum annual revenue of $50,000. Banks and other lending institutions have different guidelines for the approval of small business loans, and you should take the time to understand all of the details of each type before applying for one.

Before applying for a small business loan, you should consider what industry you’re in. Some industries are more difficult to finance than others. These industries are generally identified by SIC or NAICS codes. Because of this, some small business lenders may have more restrictions for specific industries. Listed below are some of the industries that are restricted by banks. If you’re unsure of what industry you’re in, look online to see if your type of business is on that list.

Funding circle

Funding Circle offers small business loans to businesses across the country. They claim to approve loans within five days. The application process should take only six minutes and they aim to get back to you in one hour. Loan amounts range from $25,000 to $1 million. A typical loan takes about six months to complete, and you will be required to make daily or weekly payments. You can also opt for a merchant cash advance, which is a type of loan that uses credit card sales as proof of your business’s finances. You will not need to provide a personal guarantee to receive this type of loan.

When applying for a Funding Circle loan, you need to be clear about your credit score and how much you need. You will be required to have a personal credit score of 660 or higher in order to be approved. Funding Circle loans are not unsecured, so you must have some collateral or have a business credit score of at least 660. For this reason, you should avoid using Funding Circle for small business loans unless your business has been around for many years and you have a reliable cash flow.

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