A business loan is a type of loan that provides the funds or capital that you need to expand operations, purchase equipment and cover other business day-to-day expenses.
Small Business Loan
If you have never before applied for a business loan, you might be confused or reluctant about the requirements and some questions like where to begin. Here Cashably will discuss the process of evaluating your loan options and preparing your loan application.
- Fastest funding 1 business day
- Min. time in business 6 months
- Term lengths Up to 60 months
4.8
- Loan amount Up to $500,000
- Min. time in business 6 months
- Min. annual revenue $250,000
4.8
Best for large business loans
- 3 Months in Business
- $10,000 in Monthly Rev
- Minimum Credit Score 550
4.9
Best for large business loans
- up to $1.5 million
- APR range Not disclosed
- Minimum Credit Score 570
4.7
Best for Small business loans
- Apply in Minutes
- No Hidden fees
- Wide range of Options to choose from
- Get funded in as little as 24 hours*
4.8
1. Consider Why You Need a Loan
Business loans vary from type to type. So doing thorough research on why you need a business loan? Will help you choose the right kind of loan that perfectly fits your business needs. Here are some examples of scenarios:
Buy New Equipment
Some lenders offer loans to buy equipment. These loans are designed to purchase equipment like machinery or furniture for businesses. This loan takes the equipment as collateral so the lender can keep the equipment if the business fails to repay the loan.
Borrow a Small Amount of Money
If you need a small loan amount amount of money you can go apply for a microloan. The U.S.-based Small Business Administration offers a microloan program that helps you lend money ranging from $500 to $50,000 for funding your small business financing only. Some non-profit organizations in the market offer microloans for businesses, such as funds such as Kiva etc.
Establish a Business
If you are just starting a small business loans or trying to get small business loans to boost your startup growth, you may face some financial problems. Because most of the lenders require minimum time in the business as a requirement for the loan approval.
In such cases, you may consider applying for a microloan or a business credit card. You may find it easier to qualify for a business credit card as its approval depends upon your personal credit score.
2. Check Your Eligibility
The eligibility requirements for getting a loan vary from lender to lender. But here are some common things that most of lenders require when checking your application for loan approval:
Credit Score
The first thing that a lender requires to validate your application for loan approval is your personal or business credit score. This helps the lender to analyze the on-time repayment of the loan. In short, we can say that the higher the credit score, the more likely you are to get approval for a loan.
Collateral
Some lenders may require something as collateral (something of great value, in most cases equipment or inventory). The lenders can keep your fixed assets as collateral in case you fail to repay your loan. Some lenders may also require someone’s personal guarantee, like pledging personal fixed assets, for loan approval.
Time in Business
Time in Business loans is the crucial thing in loan approval. Lenders necessarily consider the age or lifetime of your business. It can help them trust you whether you are committed to your business growth or success or not. The common time in the business loans is one year. The businesses with age less than one year may face some problems but, they can also consider some other lenders as alternate options to fulfill their financial needs.
Annual Revenue
The fourth factor that most of the lenders assess when approving your loan is the Annual Revenue of your business. The total number of sales you make per year is called annual revenue.
But make sure to ask the bank account or lender for the requirements and review your bank account to business whether it fulfills the requirements or not.
3. Compare Different Loan Options
There are tens of places you can qualify for small business loan. Here are the three most common types of lenders.
Online Lenders
Online lenders offer a large variety of small business loans, to business owners. The common types that include online lenders are term loans, merchant cash advances and lines of credit. But the loan approval rates were lower than the traditional banks as per the survey of SBCS 2023. Online lenders usually have high interest rates as compared to traditional banks.
Traditional Banks
Traditional banks also provide the same type of loans as online lenders. The main advantage that traditional banks’ loans offer is low interest rates and payment down. On the other bank’ side, the other bank’ main disadvantage is that it requires more documents and has more eligibility requirements.
Microlenders
Microlenders are usually non-profit organizations that help small businesses grow by offering loans up to $50,000. These are typically designed for business owners who don’t qualify for traditional bank loans. These loans usually have easy and fast funding and less stringent requirements.
4. Gather the required documents
Once you have considered the best loan option for you that matches your needs perfectly, start gathering the required documents. Here is the list of required documents that most of the lenders ask for.
- Personal & business tax returns
- Business licenses
- Articles of incorporation
- Personal and business bank statements
- Profit and loss statements
- Financial statements
- Business plan
- Building lease
5. Submit Your Application
The final step to get qualified for a business loan is submitting your loan application. You can do it online or in person as per the requirements of your lender. Here is the list of common information that a lender may ask for to submit the loan application:
- Your Name
- Business Loan
- Social Security Number (SSN)
- Desired Loan amount
- Loan Purpose
- Business Tax ID
- Annual Revenue
Once you have submitted your loan application, you will have to wait for due date for its approval. After the loan is approved, you have to sign an agreement with financial institution before getting the loan amount, funds or a line of credit.
Wrap Up
Securing a business loan with Cashably is straightforward and essential for expanding operations or managing expenses. Whether you’re a first-time applicant or seeking specific loan types like equipment financing or startup and working capital only, Cashably simplifies the process. Evaluate your needs, check eligibility based on factors such as credit score and business age, and compare loan options from online lenders to traditional banks.
Gather required documents like tax returns and financial statements, then submit your application online or in person. With Cashably’s guidance, navigating the complexities of securing a business loan becomes efficient and effective for achieving your small business financing goals.
Is it Hard to Get a Small Business Loan?
Securing a small business loan can be challenging depending on various factors such as your credit score, time in business, and annual revenue. Lenders often assess the risk associated with lending to your small business first, which can make the process rigorous. However, with careful preparation and understanding of your bank account eligibility requirements, you can improve your chances of approval.
What Makes You Eligible for a Small Business Loan?
Eligibility for a small business loan typically depends on several key factors. These include your personal and business credit scores, the time your business has been operational, and your annual revenue. Additionally, lenders may require collateral or a personal guarantee to mitigate their risk. Understanding these requirements and preparing your financial documents can enhance your eligibility.
What Credit Score Do I Need to Get a Small Business Loan?
Credit scores play a crucial role in loan approval. Generally, a higher credit score increases your chances of securing a loan with favorable terms. While each lender has different criteria for bad credit is, a score of 680 or above is often considered good. However, some lenders may offer loans to those with lower scores, albeit with higher interest rates.
What Kind of Loan Do I Need to Start a Small Business?
Starting a small business requires careful consideration of the type of loan that suits your needs. Options include SBA loans, which offer favorable terms and lower interest rates, and microloans for smaller loan amounts only. Business credit cards and lines of credit are also viable financing options for managing initial expenses, capital, and cash flow.
How to Start and Fund Your Own Business
Starting and funding your own business involves several steps. Begin by creating a solid business plan that outlines your goals and financial projections. Explore different financing options, such as small business loans, SBA loans, or personal savings. Understanding your funding needs and researching potential lenders can help you secure the necessary working capital to launch and grow your business.
What Credit Score Do I Need to Get a Small Business Loan?
Credit scores are a pivotal factor in determining your eligibility for a small business loan. Generally, lenders prefer applicants with higher credit scores, as it indicates a lower risk of default. A credit score of 680 or above is often considered favourable and can enhance your chances of obtaining a loan with better terms, such as lower interest rates and reduced origination fees.
However, if your credit score is between 600 and 680, you may still qualify for a loan, though the loan terms might not be as advantageous, potentially involving higher interest rates or stricter loan terms.
To Get an SBA-Backed Loan
The Small Business Administration (SBA) doesn the bank can’t directly lend money to businesses, except in cases of declared disasters. Instead, it partners with financial institutions to provide SBA-backed loans, which come with favorable terms and lower interest rates.
Are SBA loans available? Yes, SBA loans are widely available through various lenders. These loans are designed to support small businesses by reducing lender risk through SBA guarantees.
What is the easiest way to obtain money? The easiest way to secure SBA-backed financing is to start by determining your business needs and eligibility. Gather necessary documentation, such as your business plan, financial statements, and credit history. Then, approach an an SBA loan and-approved lender to discuss your options. They will guide you through the application process, ensuring you meet all requirements for a successful loan approval.
Business Advantage Credit Line Cash Secured
A Business Advantage Credit Line Cash Secured is an excellent option for small businesses looking to establish or improve their business credit. This type of credit line requires a security deposit, which serves as collateral, reducing lender risk and potentially allowing for more favorable loan terms. By securing the credit line, small businesses can enjoy lower interest rates and more manageable monthly payments.
This financing option is particularly beneficial for small businesses that might not qualify for unsecured credit lines due to lower business credit scores or limited credit history. The secured nature of this credit line provides a safety net for lenders, making it easier for businesses to access the necessary funds to cover operational expenses, pay down, purchase inventory, or invest in new equipment.
Business owners can use the Business Advantage Credit Line Cash Secured as a stepping stone towards other unsecured line of credit financing options. By consistently making timely monthly payments based on the outstanding balance, businesses can build a strong credit profile. This improved business credit score can open doors to other financing options for business operates in the future, such as unsecured lines of credit or SBA loans.
Moreover, access to this credit line allows business owners to manage working capital and cash flow effectively, ensuring they have access to funds whenever needed. This flexibility is crucial for maintaining smooth business operations, working capital, and seizing growth opportunities. Additionally, the predictable monthly payments help businesses plan their finances better, avoiding unexpected financial strain.
- Fastest funding 1 business day
- Min. time in business 6 months
- Term lengths Up to 60 months
4.8
- Loan amount Up to $500,000
- Min. time in business 6 months
- Min. annual revenue $250,000
4.8
Best for large business loans
- 3 Months in Business
- $10,000 in Monthly Rev
- Minimum Credit Score 550
4.9
Best for large business loans
- up to $1.5 million
- APR range Not disclosed
- Minimum Credit Score 570
4.7
Best for Small business loans
- Apply in Minutes
- No Hidden fees
- Wide range of Options to choose from
- Get funded in as little as 24 hours*
4.8
Overall, the Business Advantage Credit Line Cash Secured is a strategic investment choice for small businesses aiming to strengthen their financial standing while maintaining access to essential funding. By leveraging funds through this one investment option, businesses can enhance their creditworthiness and pave the way for future financial success.
