Your Small Business Guide to Loans
Managing the cashflow for small businesses can be incredibly difficult, especially if you are in an industry or location with extreme seasonal fluctuations. Financing options such as bank loans, lines of credit and SBA loans can be live saving for many companies, especially if you know how to use them to your advantage and not get in over your head.
Bank Loans and Lines of Credit
One advantage of working with a bank for your loans and lines of credit is that these institutions often offer the lowest interest rate available to small businesses. This lower rate is due to the federal regulations around bank lending and because they can be difficult to secure. You will need to show the underwriters that you are a good risk through a solid business credit history, profitability and years of operation.
Getting a line of credit is somewhat easier than getting a bank loan and can help establish your business credit history. You may be able to get a line of credit from an online lender easier, and with a higher interest rate. One benefit of getting lines of credit over loans is that you only pay interest on the amount that you use, with many lenders offering incentives for quick payment.
Small Business Administration Loans
SBA loans is usually the best option for a small business as these loan programs work with your bank to help you guarantee the funds you need and make lending to you less risky for the underwriters. It can still be a lengthy process with many hoops for you to jump through, but the various programs offer solutions for cash flow, property purchases and equipment financing to help you grow or recover from a loss.
Long-Term Online Loans
These loans work in much the same way as a traditional bank loan, just more quickly and usually with a more lenient approval process. The speed and availability of these loans often comes with higher interest rates to help offset the risk, but for many small businesses, this is the best way to get the financing needed for growth projects. Since online lenders embrace technology in all aspects of lending, the applications are usually done online and processed quickly, giving you an approval answer in a matter of days instead of months.
Online, bank, and SBA loans are all good options for small business financing, and choosing between them can be as easy as determining how long your growth goals can wait, what your business credit history looks like, and what kind of cash flow you have. You can also get a line of credit through either a traditional bank or an online lender to help with cash flow.