Succeeding in your small business is as much about careful financial decisions as it is about smart strategy and hard work. And one of the most important financial considerations is whether to opt for a business loan. Regardless of whether you require funds to start a business, or working capital to manage it, small business loans give your business the timely backing it needs. At Lendvious, we help you find this much-needed financial backing at the right time. There’s no more waiting in line at the bank to get funds for your business. With a simple and quick online application process, we bring you the most competitive business loan offers from market leaders in the lending space.
Once you set out on your entrepreneurial journey, the last thing you want is to be halted in your tracks by the dearth of capital. And that’s where small business loans come in handy! This perhaps brings you to the most fundamental question- What is a small business loan and how does it work?
A small business loan refers to the financing a lender provides to any small business owner, based on the agreement that he/she will repay the amount with interest over a stipulated time period. These loans can be used for a variety of purposes including purchase of inventory, supplies, and equipment, or investing in the latest technology, hiring employees, marketing or advertising.
Depending on your business needs, there are a variety of small business loans that you can opt for. Some of the popular types of business loans are:
SBA Loans- These are long-term loans offered by banks, and are partially guaranteed by a government entity called the Small Business Administration (SBA). This means that a part of the loan amount you receive is backed-up by the SBA. This makes it one of the Best business loans available in the market today. In this type of business loan, you can borrow anywhere between $5000 and $5 million. Another major advantage of SBA loans is that they come with very low-interest rates, sometimes as low as 6.5%. This translates to more savings for your business.
Business Lines of Credit- This is another type of business loan where your business is extended a line of credit which you can draw from, on a monthly basis. It works like a business credit card where you repay what you end up spending for your business. Business lines of credit can range from $10,000 to over a million, and extend up to 5 years. The interest rates can be as low as 7% and rarely go over 25%.
Equipment Financing- This type of business loan refers to one that you take out specifically to purchase equipment for your business. This is a self-secured loan, which means that the equipment you purchase using the loan acts as collateral. And this feature makes the interest rate of these loans much more affordable. Some lenders offer equipment financing loans for as low as 8%.
Merchant Cash Advance- In this type of loan, the lender considers your future credit card sales as an asset, and extends your business an ‘advance’, or a sum of money. In exchange for this, you are required to pay a certain percentage of your daily credit card sales revenues as repayment.
Unsecured Business Loan- If your business qualifies for this type of loan, the lender offers you a sum of money without demanding collateral. So your loan is not secured by any assets. It is purely extended on your agreement with the lender that you will repay the amount along with the predetermined interest, in monthly installments, over a fixed repayment term. Because of their unsecured nature, the interest rates on these small business loans are higher.
Business Acquisition Loan- This is a type of commercial loan that you can avail if you want to purchase an existing business or open a new franchise. The amount you can borrow is determined based on the business you wish to purchase, and the interest rate you qualify for is based on your qualifications.
You can get small business loans from banks, credit unions or online lenders. Although the eligibility criteria for a business loan varies from one lender to another, the broad requirements to qualify for small business loans are:
Time in business- Lenders in general go by the statistics that 20% of businesses fail during the first year of operation. So, to be eligible for start up business loans, you should have been in business for at least 6 months. This is one of the primary requirements for most lenders.
Revenue- Another fundamental requirement to qualify for small business loans is that your business should have minimum total annual revenue of $250,000. However, businesses with a modest income of $100,000 may also qualify for SBA loans as well as other small-value business loans.
At Lendvious, we bring you a variety of options through our revolutionary Lending platform. With a whole range of product offerings from top lenders in the market, we empower small businesses to raise much-needed funds in a timely manner. These apart, here are some more reasons why Lendvious should be your first choice while applying for a small business loan:
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