It is hard to start a new business and most of the times the budget is much bigger than you had estimated. This is why people who want to put up a new business run out of money quickly and they need to resort to banks in order to finish what they have started. Unfortunately, most banks are quite strict when it comes to giving loans for small businesses.
Traditional lenders have strict rules regarding small business loans and business owners have a hard time when they apply for such a loan to due to the stringent criteria. Nevertheless, there are still banks that have thought about owners of small businesses and that offer great small business loans. If you are interested in making a business loan, you should know that there are many types of loans out there and that you can choose one of them that you find most suitable.
Nevertheless, your business credit rating is a decisive factor for the type of loan you can receive. Thus, if you have bad business credit or even no credit at all, you will have to accept small business loans that have higher interest rates, higher payments and of course a higher rate of denial. Good or excellent business credit on the other hand, will help you get a better offer for an unsecured loan. These business loans can really help your business, if you know how to use them.
Secured small business loans are another option if you don't manage to obtain an unsecured loan, but they require collateral and only afterwards the business can receive the loan. These loans represent a good choice, since they have good interest rates. However, most secured small business loans must be paid within five years and the repayment period doesn't vary too much from one lender to another. If you can't qualify for an unsecured loan and if you have poor business credit, don't hesitate to apply for a secured loan.
SBA stands for the U.S. Small Business Administration and it was created in 1953, in order to aid, counsel and protect the interest of small business owners. The SBA loan programs were created for all small business owners who are unable to obtain credit by means of normal lenders. If you have not succeeded to get a small business loan from a commercial lender, you are eligible for a SBA loan.
Once you are sure that you are eligible for a SBA loan, you need to figure out which type of loan suits your business needs best. In order to receive help from the SBA, you need to have the following information: a well-prepared business plan, financial statements, a loan request, a collateral and management resumes. Furthermore, every application needs good credit in order to be approved. The applicants who have a high debt, low equity and a poor business plan will most likely be rejected when trying to obtain a SBA loan.
Moreover, SBA applicants are required to have a checklist that contains 14 documents which are necessary for SBA loans. These documents are: application for loan, a statement of personal history, personal financial statement, balance sheet, income and finances projection, certificate of doing business, list of names and addresses of any affiliates, copy of business lease, a short history of the business and its problems, a personal resume, signed business federal income tax returns for previous three years and signed personal federal income tax returns for previous three years.
Small business loans are meant to help people who don't have the necessary amount of money for their business needs while SBA loans represent the last option for business owners who didn't obtain a loan anywhere else. This loan is exactly what you need in order to continue or start your small business.
