How do you qualify for a small business loan?
Simply answer these 4 questions on the right and see what financing options your business pre-qualifies for in seconds.
Connect your bank account or upload recent bank statements and turn those pre-qualified offers into money in your account.
Here is a brief overview of the qualifications required for the most popular best small business loans available in today’s marketplace.
In order to qualify for financing through the Small Business Administration loan program business owners need to operate a for-profit business, have a credit score of 640 or above and provide a business plan.
Short-Term Business Loans
For this type of lending option businesses only need to be operating for a minimum of 6 months and have an annual revenue of just $60,000 with a credit score of 550 or above.
Business Line of Credit
Borrowers need to have their businesses established for at least 1 year, have a score of just 550 or above with a minimum annual revenue of $50,000 and own at least 20% of the business.
Merchant Cash Advances
Businesses that have been established for at least 3 months, have a minimum credit rating of only 550 with monthly average deposits between $7,500 to $10,000 can qualify for this financing option.
Equipment Leasing & Financing
Business owners that have been in business for 11 months, have a credit rating of 600 and above with a minimum annual revenue of $100,000 can qualify for equipment leasing or financing.
Invoice Factoring & Invoice Financing
Approval and cost of factoring services will depend on the industry and credit history of your invoiced client, or in the case of Invoice Discounting your credit history.
Are small business loans hard to get?
Qualifying for small business financing with online lenders is not as difficult as qualifying with traditional lenders.
Businesses only need to be in operation for a minimum of 6 months, have an annual revenue of at least $60,000 and a credit score of 550 or above.
The loan application process is quick and requires minimal paperwork with no business plan.
How can you get a small business loan without collateral?
Most business loans do not require any collateral.
If you are applying for certain types of SBA products or other types of long-term financing options, collateral might be necessary in order to be approved.
For short term business loans and merchant cash advances collateral is almost never required.
Using a personal loan for your small business?
You can use a personal loan for your business needs.
In some cases start-ups may have no choice but to use personal loans.
Once you have an established business however, it is best to separate your personal finances from the business finances.
Personal loans normally do not require any collateral.
Approvals, rates and repayment terms are determined based on your credit history.
Apply for business credit cards and avoid using your personal credit card for business expenses.
How long does it take to get a business loan?
It all depends what type of a business loan you decided is best for you.
While the loan application process with a traditional bank can take up to a few months, alternative lenders can have you funded in under 48 hours.
Approval for business line of credit or business credit cards takes minutes and you can get access to funds almost immediately.
Do I need a business plan to qualify for a business loan?
Certain low cost & low fees long term loans such as an Small Business Administration lending products or bank term-loans do require a business plan.
Most short-term loans however, do not require a business plan.
What is the difference between a Personal Credit Score and a Business Credit Score?
A Personal Credit Score is a snapshot on how you meet your personal financial obligations.
A personal score ranges between 300 to 850.
A score below 600 is the beginning of poor credit.
The higher the score the less of a risk a lender sees in you.
The three credit bureaus that track your credit history and grade your personal credit score are Experian, Equifax and Transunion.
A business credit score on the other hand is a snapshot of how the business meets its financial obligations.
The three credit bureaus for business are Dun & Bradstreet, Experian, and Equifax.
Registering with Dun & Bradstreet and getting a D-U-N-S number for your business is essential to establishing your businesses credit history.
Would I qualify for a business loan after bankruptcy?
Within the first two years the chances of getting approved for a loan are very low.
After the two years lenders will look to see if your credit history has improved when considering you for approval.
Is it hard to get approved for an SBA loan?
The Small Business Administration lending program operates through private-sector lenders that provide small business loans which are guaranteed by the SBA.
You can borrow money for nearly any business purpose — including working capital, purchasing inventory or equipment, refinancing other debts, buying real estate or even funding the acquisition of other businesses.
The SBA uses federal money to guarantee a large percentage of those loans to lenders, so financial institutions have more incentive to lend money to small businesses at lower rates.
Simply put the SBA backs up a portion of the lenders small business loan, meaning a lot less risk for lenders.
What is Crowdfunding?
A crowdfunding platform is where business owners look for funding for any project by raising small amounts of money from a large number of people.
In today’s interconnected world, a crowdfunding platform is built and operates via the internet.
What is peer-to-peer lending?
Peer-to-peer lending is where money is leant to individuals or businesses through online services that match lenders (peer-to-peer lenders) with potential borrowers.
Requirements for capital for peer-to-peer lenders can vary substantially from a minimum of only $25 bucks to millions of dollars.
How to get the best small business loan?
With Orumfy obtaining a small business loan is quick and simple.
Create a free account, complete our quick online loan application process and our platform will match you with a lender best suited for your business financing needs.
Understanding the various types of business financing options available combined with the knowledge of what your business can qualify for is crucial when trying to choose which one of the best small business loans is right for you.
Orumfy connects you with lenders offering the best rates and repayment terms available today.