Unless you have excellent cash flow or you’re fortunate enough to have plenty of your own money for your startup, most entrepreneurs wonder, how much can I get on a business line of credit? How to determine how much line of credit you can get for your small business might seem confusing, but you can figure out an estimate with a calculation or with the help of an advisor.

What is a line of credit, and how does it work? Whether it’s a personal credit card or a business line of credit, these are both lenders (either a credit card company or a bank, depending on the type) offering you a set amount of money to spend.

With credit, the institution extends a set amount that you, the borrower, can spend. You must make minimum payments, but you can also pay it off in full instead of being stuck with ongoing installments with credit. You can also use the credit line repeatedly, as long as you make payments and do not spend over your limit.

What is a Business Line of Credit?

A business line of credit is a form of lending from a financial institution like a bank, credit union, or Alternative Lender. These credit forms are not so different from a personal line of credit, which you can continue to reuse or pay whenever you like, within your limit.

Business lines of credit are a version of a small-business loan, yet they offer some flexibility that you won’t find in a traditional business loan. You can also repay or utilize funds multiple times, as long as it remains within your credit limit.

What Types of Companies Benefit?

Companies that have a surprise expense, need to purchase inventory, don’t have a traditional business loan, or could use some aid managing cash flow can benefit from a business line of credit.

What If Your Business Is Considered a Startup?

How much business line of credit can I get for my startup? Many startups don’t have any investors or can only get small traditional business loans. Suppose you need startup funding and don’t have enough cash flow to take you through dips in sales, need a buffer between client payments coming in, or are in an industry with significant seasonal fluctuations. In that case, a business line of credit could work for you. The amount you’ll be approved for depends on how long you’ve been in business, your credit score, and your monthly revenue.

What If You Have Bad Credit?

Small companies that cannot obtain a traditional business loan or those only approved for a small business loan because of poor credit can benefit from a credit line. Those who have less-than-ideal credit but also landed a significant client or business deal and need extra resources to help them until their credit score improves can also use a business line of credit. Traditional bank financing can be very difficult to get when you have a bad credit score. Choosing an alternative lender may be your best option. Speak with a Business Financing Advisor to fully understand your options.

Line of Credit vs. Credit Card

You should note that there is a difference between lines of credit vs. credit cards. The line of credit for a business can offer you a higher limit because the approval is based on your business as a whole, not just your personal credit score.. These credit lines also come through a lender such as a bank instead of a credit card company.

If you use a business credit card, you may get cash, but it usually comes with a higher APR and fees. Typically credit card penalties, such as late-payment charges, also apply to business credit cards.

Generally, business credit cards are better for those with a newer startup that has yet to establish significant finances. In contrast, a business line of credit is ideal for a company that has operated longer and deals with more substantial and ongoing expenditures.

Line of Credit vs. Small Business Loan

Both a business line of credit and a small business loan are considered bank-issued lending. Although in recent years, Alternative Lenders have closed the gap to also provide financing. However, a loan does not revolve the fund amount like a line of credit. You get the loan, and you repay it over time.

A business line of credit is often a smaller amount than a loan, but the credit is revolving, much like a personal credit card. You can repay it in full or in smaller payments, and you can use the credit again and again, as long as you make the minimum payments and stay within your total limit.

Know the Limits: How Much Funding Can You Have?

If you’re interested in this type of “loan,” one of the first things you’re probably wondering is:

How much line of credit can I get for my business?

A business line of credit does require more revenue and a more established company-even if it’s small-than a business credit card. For a line of credit, you can estimate the general amount you can ask for with a calculation.

Determining the Line of Credit Available

To calculate the estimated amount you may need for a credit line, divide your gross annual revenue by 365, which determines your sales (daily average).

Then total up your accounts receivable and add your inventory days-on-hand. Subtract from that the number of your accounts payable days-on-hand. This number will give your usage of cash.

Multiply your usage (AR days minus accounts payable days). This calculation can provide you with a general estimate of your needed credit.

Keep in mind, your limit, much like a personal line of credit, will depend on a few factors. For business lines of credit, you can expect the lender to consider how long you’ve been operating your company, your monthly revenue, and projected revenue. Occasionally, the lender will also want to know your personal credit history, especially if you are the company’s sole owner.

What are My Options?

How fast can you get a business line of credit? The answer depends on your type of business, revenue stream, credit score, and other factors. ROK Financial can get you set up with a revolving business line of credit within just a few hours!

When getting a startup up and running, you may have the option of a business line of credit, a small business loan if you’ve already operated for a few years, or even AR financing for specific situations. Line of credit rates also vary, so if you need a more accurate estimate or want to know which lending option would work best for your business, ROK Financial Advisors are standing by to help.

When it comes to determining the cost of a small business loan, it depends on a number of different factors; the amount you’re looking to borrow, payment schedule and the type of small business loan you intend to apply for.

No matter what type of loan you are seeking, you are going to want to know exactly how much it will cost in the end. Knowing the true cost will allow you to make the right decision for you and your business.

Different Costs to Consider when Getting a Loan

Interest rates are standard costs associated with every type of loan. Interest rates vary based on the product, and the business qualifications. Time in business, annual revenue and credit score usually play a part in determining the final rate you will pay. The lower the interest rate, the lower the cost of the loan.

Not all interest rates are quoted the same way – a simple interest rate is an amount that a lender will charge on the principal only. An APR interest rate includes simple interest as well as fees that the lender will be charging you.

In addition to the interest you will pay on your loan, depending on your lender, you’re likely to encounter other fees tacked on to the final cost such as

• Documentation fees
• Origination fees
• Loan processing fees
• Account maintenance fees
• Guarantee fees
• Prepayment penalties
• Late Payment Fees

Not all fees are associated with every loan, and the costs are dependent on the lender.

Fees can significantly affect the price of a loan. It’s important to investigate exactly what the fees are so you feel comfortable with what you are being charged with.

How Much is a Business Line of Credit

Rates on a business line of credit vary from 7% to 80%. Mainly because they function differently from a term loan. On a term loan, you are charged interest on your total loan amount. On a business line of credit, you are only charged interest on the amount you draw from your credit line.

Fees also may be different on the total cost of a line of credit. Some lenders draw a fee each time you pull from your line, some may charge a fee if you do not draw within a certain period of time, and others may charge a fee just to keep the account active.

How Much is Equipment Financing

When it comes time to purchasing equipment for your business, and you do not want to deplete your bank account to do so, equipment financing may be a better option.

With APR ranging 8%-30%, the actual rate you will pay depends on the cost of the equipment, and your qualifications (time in business, annual revenue and credit score). The cost structure of an equipment financing deal is straight forward, you finance the full piece of equipment and repay the interest and principal over the fixed terms. The equipment is used as collateral, and once the payback period is complete, you will own the equipment outright.

How Much is a Merchant Cash Advance

Merchant cash advances can provide the most flexibility for business owners due to their structure but can sometimes be costly.

Merchant cash advances isn’t technically a loan, but rather a cash advance that is paid back by withdrawing a percentage of your credit card sales (typically on a daily basis). Since your payback is based on your sales, the more credit sales a business does the faster they are able to repay. This comes in handy for some business owners as well during slower periods of time for the business since the payback is reflective of the incoming cash flow, however in those cases it can take a longer time to repay the loan.

How Much is an SBA Loan

A Small Business Administration (SBA) Loan is one of the more affordable loan products out there. Determining the rate of an SBA loan is determined by the current prime rate plus points added by the lender. The SBA provides guidelines on the maximum rate they are allowed to charge on top of the prime rate.

The ARP on an SBA loan is typically 7% to 8%. The SBA does charge a small fee for guaranteeing the loan. That fee depends on the loan amount. For loans up to $150,000 the fee is waived, for loans greater than $150,000 the fee will depend on the length of the loan.

SBA loans tend to be more affordable because they are a true bank products (which tend have better rates) and because they are guaranteed by the government, it lowers the risk for traditional intuitions. On the downside, SBA loans can take months to be approved and processed, leaving some business owners strapped for cash or missing opportunities due to the long processing time.

If you are looking for an SBA loan, ROK Financial has direct access to lenders that provide an expedited process to fast track your SBA Loan. We offer competitive rates to cover working capital and growth expenses.

Summary

The answer to “How much is a small business loan?” varies based on the type of financial product- among other things.

When you are looking for business financing, you want to make sure that you understand any costs that your business may incur throughout the borrowing process. ROK Financial’s Business Financing Advisors will help you find the right product for you and your business. Not only the financing you need, but the business financing you can afford.

To learn more, complete our simple 1-minute application to speak with an advisor today!

Spring and summer are the busiest times of the year for most automotive repair businesses. As the winter approaches, now is a good time for auto shops to take care of those items on their to-do lists, just as any good car owner would do for their car’s maintenance. If garage equipment is deteriorating or needing an upgrade, auto-equipment financing may be the right avenue for auto repair shops to repair and replace equipment.

What is auto repair equipment financing?

This type of loan works like a car loan. Lenders provide financing specifically for equipment businesses need to remain profitable.  The lender secures these loans by placing a lien on the equipment. As long as the borrower makes timely repayments, the borrower can keep the equipment. Once the auto repair shop pays off the lender, the shop owns the equipment.

A key distinction between most small business loans and auto repair financing is that auto equipment financing is secured. Unsecured loans carry higher interest and may not be readily available to those with poor credit.

Equipment Financing is available to repair or replace:

• Diagnostic equipment
• Frame racks
• Tire replacement machines
• Lifts
• Tow trucks
• Any equipment used to perform maintenance or automotive repair.

5 tips when considering financing auto repair equipment 

• Available cash: Obtaining a loan targeted to equipment enables an auto shop to allocate cash to other parts of the business, like payroll or marketing.
• Tax breaks: Businesses can deduct up to $500,000 on qualified equipment purchases on their U.S. income tax returns. They can also deduct the interest paid for loans on most types of equipment. Always consult your tax professional regarding tax breaks.
• Faster approval: The application is faster than traditional loans and doesn’t require a pile of documents. Approval usually only takes days.
• How to qualify: Higher credit scores, longer times in business, and higher sales provide applicants access to more lending options and better terms and rates. For those without these advantages, online lenders such as ROK Financial are the best option. Online lenders don’t typically require high credit scores and may even provide financing to startups.
• Know your financing options

While equipment loans are a great option for auto repair businesses in need of equipment, some auto shops may find other loan types that are more feasible for their operations.

1. Small Business Loans: Small business loans, like all other standard loans, may not be as easily available to those with poor credit, but they do have the best rates and terms. The Small Business Administration is a major lender and offers several types of loans, including equipment loans. While SBA loans have great rates and terms, SBA loan applications are lengthy, require extensive supporting documentation, and approval can take weeks. Learn more about the SBA loan process.
2. Business Line of credit: Unlike a traditional small business loan, a line of credit provides a business to borrow smaller amounts if the maximum amount is not needed. Some business lines of credit return or revolve to the maximum limit, usually monthly, once the borrower repays debt. Flexibility is the main advantage of this option, but the downside is that these loans carry higher interest rates than traditional loans. Borrowers will find better rates at banks, but banks won’t lend to anyone with bad credit. Online lenders provide business lines of credit for those with bad credit though.
3. Accounts receivable financing: Businesses can use their outstanding invoices to obtain financing. Businesses can either sell their AR to lenders for up to 90% of their value or use them as collateral for a loan. AR Financing acts a quick source of funding, but interest rates are higher than most other loans.

With so many financing options available to auto repair businesses, speaking with a qualified advisor can help owners make the best decision for their shops. Speak to a ROK Financial Advisor to discuss your financing needs.

What is an SBA Guaranteed Loan

A guaranteed Small Business Administration loan is not a guarantee of approval. Rather, it is a guarantee from a U.S. government agency with the full faith and credit of the U.S. to a private lender insuring a majority of the loan should the borrower default. SBA loans fuel economic development. In 2019, the SBA approved 58,000 loans and issued $28 billion in funding, according to the SBA.  The amount will surely be higher in 2020 because of the CARES Act, which infused an additional $376 billion in funding in response to the Coronavirus pandemic. The SBA issues many different kinds of loans, but what their loans have in common is that the terms and rates are better than most other lending options. 

SBA Loan Options 2020

Standard 7(a): As the name suggests, it is the most common loan the SBA issues. Qualified small businesses can obtain up to $5 million in borrowing, negotiate for interest rates in single digits, and pay as little as 0.25% of loan amount in fees. The SBA doesn’t require collateral for loans less than $25,000 and approves most loans within 10 business days. 

Other SBA 7(a)loans offered include small, express, export, international trade, preferred lenders, veteran-owned small businesses, and non-revolving and revolving lines of credit.  

Disaster Assistance Loans: The SBA provides these low-interest loans to small businesses, non-profits, renters, and homeowners in a federally declared disaster zone. Businesses can qualify for up to $2 million in funding; homeowners can qualify for up to $200,000; and renters and homeowners can qualify for up to $40,000 to replace destroyed or damaged personal property such as vehicles and furniture. The SBA provided more than $3 billion in loans to victims of 2017’s Hurricane Harvey. 

Coronavirus Relief Options 

This year, Congress infused more money into the SBA loan programs through the CARES Act to address the economic crash resulting from the pandemic. The two primary funding options at small businesses” disposal to combat the economic downturn are the Payroll Protection Plan and the Economic Injury Disaster Loans.

• Payroll Protection Plan: The PPP is by far the more recognized name. Small businesses could apply for loans to cover payroll, thereby keeping people employed. The key feature of this plan is that the loans are forgivable. Unfortunately, the SBA stopped taking applications in August. Congress is at a standstill negotiating new funding for the PPP, but small businesses continue to cry out for an additional lifeline. Congress may inject new funding after the November election or when a new Congress takes office in January. 
• Economic Injury Disaster Loans: These loans are still available. Small businesses that lost revenue due to the Coronavirus can qualify. EDIL’s are not forgivable like the PPP but can be applied to normal operating expenses. Interest rates are $3.75% for businesses and 2.75% for non-profits. Term is 30 years, and no fees are required.  

7 Reasons to Choose an SBA Loan

1. Availability: While prospective borrowers will have to meet requirements set by the SBA and complete a lengthier application than from a private lender, SBA loans are available at most lending institutions. Since the federal government bears much of the risk, private institutions are more than happy to provide more financing than they would without government backing. The SBA assists with finding local lenders. 
2. Best rates and terms: Since the purpose of the SBA is to provide relief and not make a profit, borrowers will get the best rates and terms from these loans. The downside is that they are available only to those with good credit, but for qualified borrowers, terms include up to $5 million in long-term loans at the prime interest rate with a maximum 2.75% interest rate added. 
3. Low and zero down payment and fees No down payment required for loans of $50,000 or less. Fees are lower than most loans. Veteran-owned small businesses pay no fees on loans up to $150,000. 
4. Repayment options: SBA allows repayment for microloans up to six years and up to 25 years for real estate loans, terms not available for loans not backed by the SBA. 
5. Variety: The SBA offers nine different types just for its 7(a) loan program from $50,000 to $5 million to address small business needs from payroll to international trade. 
6. Assistance to underserved markets: Through its Community Advantage program, the SBA provides loans to low and moderate-income communities, businesses operating less than two years, rural areas, and women and Native American-owned businesses. 
7. Collateral requirements: SBA doesn’t require lenders to take collateral for loans up to $25,000 and provides guidelines to lenders for amounts greater than $25,000.  The guidelines are based upon the SBA’s desire to assist small businesses, not make a profit. As one of their own report’s states, “when loan servicing and liquidation activities are necessary, they should reflect a balancing of SBA’s interest in: (1) achieving the goals of the loan program, i.e., helping entrepreneurs start, build and grow viable small businesses; and (2) maintaining the integrity of the loan program, i.e., ensuring that the Agency can maximize its recovery if the Borrower defaults on the loan.”

SBA loan approval can be an arduous process for small businesses to maneuver. ROK Financial provides SBA loan and other lending assistance within seconds. Learn more about ROK Financials’ SBA loan options.    

No matter the device, proper equipment is essential to power the engine of a successful business and to generate growth. As any small business owner can attest, having the most efficient and productive equipment boosts the bottom line. Small business owners can also attest, however, that purchasing or even upgrading existing equipment is costly, and sometimes, equipment breaks at the most inopportune time. Fortunately, traditional and online lenders provide loans exclusively for and equipment. Obtaining these loans can keep a small business operation running smoothly. Equipment financing can have better rates than other types of business loans with less onerous requirements and quicker approval.

What is Equipment Financing?

Equipment financing is specifically used to purchase equipment for your business. Financing works similarly to a home mortgage.  In this arrangement, the equipment acts as collateral for the loan. If the consumer fails to pay back the loan, the lender takes possession of the property, but the consumer can use the property if he/she makes regular payments. Like a home mortgage, most equipment loan lenders will require a down payment, as much as 20%. 

Equipment Financing vs. Equipment Leasing

Some, understandably, confuse equipment financing with equipment leasing and may think the two are interchangeable. The two are different financing options though. In an equipment lease, a renter (lessee) takes possession of the equipment from the owner (lessor) for a period of time for an agreed-upon price. At the conclusion of the lease, the equipment returns to the owner. In equipment financing, a consumer obtains a loan to purchase equipment and takes ownership, while the lender places a lien on the property until the debt is repaid.

Equipment financing terms range from months to years. Qualified recipients can obtain loan amounts from $10,000 to more than a million. Some lenders have rates as low as 3% and increase from there. Traditional outlets like major banks will have better interest rates and terms, but loans at traditional institutions are typically available for established businesses and those with good credit scores. 

Can you qualify for an Equipment Loan as a Startup?

Finding available good terms for financing can be difficult, if not impossible for startups. Like all loans, consumers will have more options at better rates if they have good credit. Consumers can check their credit scores at annualcreditreport.com. 

Lenders require financial documents, business licenses, and tax filings. Traditional lending institutions provide better terms but take longer to approve. Traditional lenders are not a viable option for startups though. One reason is that traditional lenders usually require about a year of business operations. Online lenders can be a good source for startups looking for equipment financing. Rates and terms are not typically as good with online lenders as with traditional financing sources, and their process is faster. Before deciding on an equipment loan, a startup or any other small business should explore other financing options. 

Know Your Options

• Business Line of Credit: This financing option provides access to flexible funding up to a maximum limit. Unlike a traditional loan, this option allows a consumer to borrow what is needed, instead of the full amount. Some business lines of credit return or revolve to the maximum limit, usually monthly, once the borrower repays debt. Flexibility is the main advantage of this option. The downside is that these loans carry higher interest rates than traditional loans. Borrowers will find better rates at banks, but banks won’t lend to anyone with bad credit. Online lenders provide business lines of credit for those with bad credit though. 
• Small Business Loans: Small business loans are another option. These loans have the best rates available, but like all other standard loans, are not available to those with poor credit. The Small Business Administration is a major lender. The SBA provides billions in loans in a typical year, and the CARES Act provided $376 billion in added funding to assist businesses during the Coronavirus pandemic. Private lenders issue these loans, but the SBA with the full faith and credit of the U.S. oversees them and bears some of the risk. The SBA offers several types of loans, including equipment loans, up to $5.5 million. While SBA loans have great rates and terms, SBA loan applications are lengthy, require extensive supporting documentation, and approval can take months.    

Three Reasons why Equipment Financing is a Good Resource for Small Businesses

1. Equipment is vital but expensive: When a small business contractor’s crane breaks down or when a small financial firm’s computer crashes, they can’t afford to use inferior or broken equipment and stay in business. When equipment breaks, businesses need to replace it immediately but likely won’t have enough cash on hand to buy a replacement. Equipment loans allow businesses to address broken or outdated equipment and maintain their capital for other expenses.
2. Secure loan: The equipment purchased by the loan is used as collateral. Unlike unsecured business loans, secured loans come with better rates and terms since they are less risky to lenders. Once the borrower pays off the loan, the small business has an additional asset. 
3. Faster approval: Unlike traditional business loans that can take months for approval, equipment financing takes only days. 

Individual circumstances vary. ROK Financial advisors are available to discuss individual small business financing options.  

Are you a small business owner in need of cash right now? Consider a merchant cash advance. MCA’s can be a lifeline for businesses but before obtaining one, educate yourself on what they are and their pros and cons. 

What is a Merchant Cash Advance?

An MCA is a cash advance from a creditor based upon a merchant’s credit card sales. MCA’s aren’t loans, so they operate differently. Let’s say Phil’s Pizza does $10,000 in credit and debit card sales each month, and Phil’s Pizza and a merchant cash advance provider agree to an MCA. 

The lender will determine Phil’s ability to pay back the advance using a factor score. The score ranges between 1.1 and 1.5, the higher the risk, the higher the factor score. Phil and the provider agree to a cash advance of $10,000. If Phil’s factoring rate is 1.3, then the lender will charge him $3,000 in fees. Phil’s Pizza is obligated to repay $13,000 to the lender, but how Phil repays them differs from a loan. Since MCA’s are not loans, they are subject to different regulations and their terms differ from traditional loans.  Understanding what MCA’s are is key to determining which provider may be the right option for a small business. 

Important Terms to Know

1. Holdback: Unlike a traditional loan where a recipient agrees to pay back the loan in fixed amounts, credit card sales are the basis for MCA’s. The recipient agrees to pay back the lender based upon a percentage of credit card sales. The recipient agrees to “holdback” a percentage of the business’s credit card sales each month. In our example, Phil agrees to pay back the advance by giving his lender 17% of his monthly credit card sales. At this rate, Phil would pay back the advance in six months. If Phil’s credit card sales total more than his usual $10,000, he still repays on the agreed upon 17%. Thus, Phil would pay back the advance sooner, but Phil pays less if his credit card sales fall below $10,000. 
2. Factor rate: Factor rates are based upon industry, time in business, and especially credit card receipts. MCA’s carry high risk for the provider, so the rates are much higher than for traditional loans. The cash advance isn’t based on an interest rate. However, the annual percentage rate or APR includes interest and fees, so the APR can be calculated for MCA’s. APR’s will be in the double or triple digits, higher than traditional business loans. Factor rates aren’t amortized either.  

Benefits of a Merchant Cash Advance

1. Available to those with bad credit. If Phil’s Pizza’s oven breaks, he can’t afford to work with one less oven until he saves up enough funds to buy another. Phil could apply for a small business loan, but what if he doesn’t qualify because of a poor credit score?  Anyone with a credit score below 670 is defined as a subprime borrower. Subprime borrowers will find it almost impossible to get lending from traditional outlets like banks. But many online merchant cash advance providers don’t require minimum credit scores to qualify. 
2. Simple application and speedy approval. In our example, Phil needs a new oven now! National Pizza Day is coming next week, and his restaurant will be packed with pizza enthusiasts. MCA’s don’t require a lot of paperwork.  MCA approval leans heavily on credit card sales. Once approved, consumers can get access to cash in less than 24 hours. 
3.  No collateral required: Since MCA’s aren’t loans, applicants don’t have to put up collateral to obtain one. However, recipients might be personally liable for the advance. Some lenders require personal guarantees, allowing them to pursue individuals if a business fails. Discuss this with your lender before signing the dotted line. 
4. When sales are down, so are payments: Unlike loans, consumers aren’t required to pay a fixed amount if revenue is down. Missing payments, underpayments, or late loan payments usually results in added fees in addition to accumulating interest. MCA recipients may pay less one month without penalty. 

How to Apply

1. Gather necessary documents: While the required paperwork for an MCA is less onerous than a loan, applicants will still need to provide their Social Security number or tax ID, and credit card sales.
2. Apply: Applying and approval can happen in a manner of hours, not days. ROK Financials’ merchant cash advance application takes 15 seconds, provides up to $5 million in funding, and offers same day funding. 
3. Finalize the details: Once a small business has access to this cash advance, the operator has to pay back the advance plus fees. Work with the provider to determine your cash advance and the amount “held back” each month (payment options may vary between daily, weekly and monthly). 

Since MCA’s are not loans, the regulations vary state by state, and terms vary depending on lender. Lenders don’t provide payment history for cash advances to credit agencies. Consumers won’t build up their credit scores by meeting the terms of the advance. However, there are some cash advance options that may help you build your business credit. 

Since MCA’s are a non-traditional form of lending you may have more questions. You can speak with ROK Financial advisor for assistance to better understand these financing options.    

The short answer is no. You shouldn’t leverage a business line of credit for personal expenses. Even though many business owners consider their businesses as extensions of themselves, using your line of credit for personal expenses, can cause you major issues down the road. 

At the end of the day, lenders so not monitor every transaction to confirm whether or not it is for business or personal use but when it comes time to filing taxes you may encounter legal ramifications if it is discovered that a business line of credit was used for personal expenses.

It’s important to note, that if a loan is needed for personal use, you should be applying for a personal loan. 

Difference Between Personal & Business Line of Credit

For a personal line of credit, your approval will be based solely on your credit score. It is a personal guarantee like a credit card. You are given a credit limit, only use what you need, and pay interest on your balance.

For a business line of credit, you can leverage your business for approval. Lenders will look at the big picture of your business, like sales or the amount of time in business. A business line of credit could be quite easily approved for an existing company based on the overall business’s health.

Downfalls of Mixing Personal and Business Expenses

• There are tax differences between the two that are subtle, but, of course, pertinent. Suppose the tax laws are not explicitly followed, such as strict division of expense accounting. In that case, it could garner the Internal Revenue Service’s interest, who does not take unfulfilled tax payment lightly- if even by accident. So, extreme care is necessary if one were to attempt to mix business and personal finances.
• Legal liability could be a sticky issue, as well. While it is easy for a business owner to think of the business as an extension of self, this opens up a world of personal legal liability. According to Crestmont Capital, “If a business owner is using the business as an extension of their personal life, the business owner can potentially be held personally responsible for any legal liabilities of the business.” That means that your personal life could bear the legal brunt of any perceived indiscretion.
• Future funding could be at risk if you operate your finances outside of the loan agreement’s covenant. In other words, if your lender doesn’t think you are using the funds in good faith according to how they were earmarked for approval, you are putting your ability to get re-approved with that company at significant risk. Underwriters often look for red flags in expenditures. Any cross-use of finances might put further funding at a substantial disadvantage.

As we have seen, the repercussions of mixing personal and business lines of credit risk your business’s loss. The stakes are simply too high.

How Does a Business Line of Credit Work?

A line of credit is like a credit card. You are given a limit to the line of credit (like your credit card), and you borrow what you need, and you only pay interest on what you owe.

As opposed to a personal line of credit, a business can also be leveraged for approval.

It’s an excellent way to borrow instead of a term loan with a bank that could for a larger amount than you need, and you could be looking at lengthy approval times. You will be paying interest on the full loan until it is paid off, and you will have to be re-approved every time you wish to obtain more funds.

Are Purchases on a Business Line of Credit Tax Deductible?

According to the website Supermoney, in general, the interest charges paid on a business line of credit are considered a deductible business expense as long as it is used to pay for necessary expenses in your business’s running. 

Purchasing equipment and other necessary supplies are of themselves allowable business deductions. 

The IRS may require an itemization of items purchased with borrowed money to justify the expense.

Always consult with your accountant when it comes to different tax benefits your company  may or may not qualify for.

How to Obtain a Business Line of Credit

Still wondering how to apply for a business line of credit?

Applying for a business line of credit at ROK Financial couldn’t be easier. ROK Financial can offer the best small business line of credit. Our streamlined processes and strong relationships allow ROK Financial to find the right terms for your practice or healthcare organization.

1. Complete the application for a business line of credit with some necessary information to see which financing options you qualify for and be paired with a Business Financing Advisor.
2. Your Business Financing Advisor will contact you within 24 hours.
3. Tell them how they can help you find the right business line of credit found in briefing; could not extract the link> for your small business needs. Your Business Financing Advisor will work to find the best loan for you in a global marketplace of 75+ lenders.
4. Get approved in as little as 24 hours and receive funds in 1-3 days.

It’s that simple!

Equipment Financing for Medical Equipment 

Medical Equipment Financing can be an excellent option for any healthcare profession. It can work to enhance your business in many ways.

Patient growth and up to date healthcare equipment are keys to cash flow in the medical arena so that your organization can provide the most state-of-the-art care in a patient-friendly environment. If a patient feels cared for with the best monitoring equipment, in a comfortable environment, and with prompt test results, their feeling of well-being will rise.

That’s why many medical professionals turn to medical equipment financing to obtain the tools and resources they need. A medical equipment loan or lease can help you get the diagnostic equipment your business needs for growth and take on new patients.

Here are four reasons for investing in your medical business through medical equipment financing:

1. The patient experience is essential to any medical facility. Updated equipment will show your patients they are getting the best care available. A patient has confidence in getting the best medical care available to them and promptly.
2. Stay on top of medical technology. You can update medical equipment without clearing out cash reserves. And offer the latest treatment, testing options, and monitoring equipment.
3. Your business can save on taxes. Use a section 179 deduction to save on taxes potentially. The savings can be applied toward new or pre-owned equipment. 
4. And, you can find the medical equipment financing that is right for your business. Let the experienced professionals at ROK Finance be your partner in finding the correct medical equipment financing that works for your healthcare workplace. After our 5-minute loan application online, you’ll be connected to an experienced professional who will help you determine the right medical equipment financing for your business.

Interest Rates for Medical Equipment Loans 

The good news about medical equipment financing is that it can be custom tailored for your situation to find the best loan for you. Your ROK Financial Advisor will help find the best options for your practice or organization by shopping your loan to multiple lenders, leaving you with numerous medical equipment leasing options. 

Base qualifications for leasing brokers are usually in the range of these numbers:

• Six months in business,
• FICO score over 575,
• And a quote for the equipment from the vendor.

Whether these numbers are increased or decreased can dramatically open up options when you talk to your ROK Financial Advisor and are discussing leasing or lending options. 

Leasing vs. Buying Medical Equipment 

According to The Research Process, there is a growing inclination in the medical field toward renting or leasing medical equipment rather than buying new. This decline is due primarily to the budgetary constraints in the healthcare arena itself, a lack of on-hand cash reserves to make such purchases.

Leasing medical devices and equipment allows healthcare professionals to access the latest technologies that make your clients feel safe and in a caring environment without having to pay large amounts out of pocket. This allows practices to free up cash flow while still providing top-notch care to patients. 

Can You Finance Used Equipment?

Yes! ROK Financial does provide loans for medical professionals looking for used medical equipment. Indeed, there is a medical equipment leasing industry for that since the machines and devices can be so expensive. 

The equipment’s type and condition will dictate the down payment, interest rate, and repayment terms of the medical equipment financing. But that is where the power of ROK Financial works for you. Given the same equipment, we can search for the best terms that work for you and your business. 

Let ROK Financial be Your Partner in Medical Equipment Financing

ROK Financial is the best lender to work with for medical financing. Our fast and easy loan process will put you in touch with a Financial Advisor within 24 hours, and approval can happen in as little as 24 hours. That’s how fast your medical organization could be on its way to the next phase of growth.

Working with ROK is fast and easy. And you’re in good hands. They will work to find the best medical equipment financing agreement for you. So, apply today! 

In a word, what describes what small businesses face in the Coronavirus pandemic? Uncertainty. A July 2020 survey from the U.S. Chamber of Commerce shows a majority of small businesses that closed in the spring when COVID hit have reopened. Yet, a majority worry about financial hardships or even going out of business.  The varying government responses throughout the country exacerbate the situation. Despite the current conditions, small businesses have resources at their disposal. One way for small businesses to mitigate the financial uncertainty and anxiety is to obtain a small business loan.  

Things to Know Before Applying

1. Know what you need a loan for: Is it to meet payroll? To pay rent? To remodel outdated equipment? To increase inventory ahead of season? Whatever the reason or reasons, a lender will require a borrower to specify where the money will be applied. 
2. Credit Score: Consumers are entitled to one free credit report per year. Visit annualcreditreport.com, the only website authorized by the Federal Trade Commission for free reports. The higher the credit score, the more lender choices available and at better rates. For those with credit scores below 680, defined as subprime borrowers, getting loans at traditional institutions are almost impossible.  
3. Determine time in business and revenue: Lenders will have minimum requirements. The requirements vary, but traditional banks have more stringent ones. 

Steps to Getting a Small Business Loan

1. Gather required documents needed for funding

   Having these documents accessible when applying will expedite lender approval and will determine the loan terms and amount.

• • Social Security number or Tax ID

• • Business licenses and filings

• • Tax filings

• • Profit/loss statement, balance sheet, bank statements

• • Review individual lender for additional documents

2. Understand Different Small Business Funding Options 

Traditional Bank Loans: These loans usually provide a fixed amount that the borrower must pay back in monthly increments. The most common loan for an existing business is a line of credit, in which the borrower has access to funds from the lender. These loans have lower interest rates than non-traditional but require higher credit scores.

Revolving Lines of Credit: A revolving line of credit allows a borrower to borrow up to the credit limit like a regular line of credit, but the key difference is, the credit limit returns or revolves back to its original amount once a borrower pays back borrowed money. A credit card is the most common form, but credit cards are advisable for only small purchases. Other forms of revolving credit will be better options for large needs. 

SBA Loan: These are loans from the federal agency the Small Business Administration. The SBA doesn’t directly issue loans but minimizes the risk to private lenders who administer them. 

Congress, in response to the economic shutdown in the spring, passed the CARES Act, which infused money into the SBA. The SBA offered the Paycheck Protection Program (The program ended on Aug. 8), which provided billions to small businesses. These forgivable loans were designed to keep employees on the payroll of shuttered businesses. Many members of Congress have called for the restart of PPP, but fierce political divisions have prevented new funding legislation. Negotiations in Washington continue. 

Another portion of the CARES ACT authorized the Economic Injury Disaster Loan Program. The SBA provides up to $2 million in EDIL loans and forgives up to $10,000. They are intended for fixed debt like a mortgage or rent and business expenses like payroll. These loans are offered at 3.75% to qualified applicants. 

Aside from the CARES Act, the SBA offers several different types of its 7(a) loans. Applicants rejected by traditional banks may qualify for one of these loans. Borrowers can benefit from the lower interest rates the SBA offers, but the application process can be onerous. 

4. Apply

With your research complete, and information and documents in hand, a small business can take the steps needed to keep it going during this time of uncertainty. Business experts advise to not wait until the aid is desperately needed. Applying and being approved will provide access to what may be vital funding. 

Still not sure which small business loan works for you? Complete a 1-minute application with ROK Financial and speak with an advisor. 

More than 11.6 million businesses in the United States are owned by women, however for some reason, financing options for women business owners seem few and far between. Even when applying for loans, women were less likely to be approved compared to men.

When it comes time for women business owners to obtain the financing they need, it’s important to fully research all the financing options that may be available. As well as understand the minimum qualification required for each type of loan.

Beyond loans, there are also grants and other resources designed to ‘level the playing field’ and help women entrepreneurs succeed.

Small Business Loans for Women [Steps to Apply]

1. Do you research, and check your eligibility before you begin the application process. Is your business fit to apply at a traditional bank, or would an alternative lender be more favorable to your business needs and current situation?
2. Gather necessary documentation. Most lenders will require similar documentation such as business bank statements, tax returns, and drivers license.
3. Choose a program that fits your business needs
4. Complete the application

Where to find Business Grants for Women

Besides small business loans for women, there are a variety of women’s small business grants available. Grants don’t usually have to be repaid, and there are many designed specifically for women.

That’s a good thing if you’re a first-time business owner or in the early stages of growth. These benefits do, however, make the competition for these grants stiff.

How to Find Grants

Federal Grants

When looking for grants, its best to leave no stone unturned. First, you would want to search on a federal grant level. Grants.com is an excellent website to start that process. Check out the blog on what precisely a grant is and some of the basic terminology used. You can also search for federal grants online there.

State Grants

Next, you want to search on the state level. The online location of these grants will vary from state to state. You’ll want to search “{your state} small business grants for women”. Hopefully, you will be pointed to the grant location in your state- usually a government website.

Other Organizations

There are also grants available from non-profits, private organizations, and industry-specific organizations. There are many grants available in this way designed specifically for women and minority women small business owners. But, be prepared to do your homework and wait for the necessary processing.

Minority Women Funding Options

There isn’t one particular type of small business loans designed for minority business owners. Business loans specifically for minorities, can come from multiple loan providers, including the SBA, micro-lenders, or non-profit organizations.

Generally, small business loans for minority women can fall into four basic categories:

• Small Business Administration (SBA) loans
• Bank or credit union small business loans
• Business loans from online lenders (like ROK Financial)
• and, Micro Loans

Deciding which one to pursue depends on several things, including your business’s financial profile, your credit rating, your financing needs, and your overall business goals.

Start-Up Business Loan Options for Women

SBA Loans, Micro Loans

The Small Business Administration offers multiple loans within their selection. The SBA Micro Loan program lends small amounts of money, up to $50,000, for start-ups and small businesses. The average microloan is $13,000. The drawback of a microloan can be the micro part. The dollar amounts are relatively small.

Friends and Family

A no-interest loan can often be obtained from family members or friends interested in helping you or just for an investment. The drawback is if the loan defaults, then the relationship could go south.

 Credit Cards

Many small business owners use credit cards to fund their start-ups. Credit cards can be very pricey as a personal credit score often determines interest rates.

Grants

As discussed above, Grants can be an excellent option for small business funding for women. Many are mainly designed small business loans for women that don’t require repayment.

Many loans are tailored for small business loans for women and small business loans for minority women.

How to Become a Certified Woman Business

Becoming a Certified Woman Business allows women to pursue specific public sector work or “set-asides.” Set-asides are contracts with the federal government earmarked for small businesses, including women and minority small business owners.

You can self-certify or get certified through SBA approved third parties. Organizations that are authorized to empower women-owned businesses include the Women’s Business Enterprise National Council, the National Women Business Owners Corporation, and the U.S. Women’s Chamber of Commerce.

Registering through a third-party organization does cost money, usually less than $500. Self-certification is free but requires a process of online registration.

One is not necessarily better than the other. But, the first step is to make sure that your small business meets the guidelines:

1. Meeting the SBA’s size standards for a small business
2. A 51% ownership by women
3. Women in charge of daily operations
4. A woman in the highest office position

The paperwork can be lengthy, so it is a good idea to have your ducks in a row when applying. Any paperwork missing can cause delays in getting a certification.

Summary

Taking advantage of unique benefits for your business could be the difference when surviving the current business climate. If you are a woman-owned or a woman-owned minority business, let ROK Financial help you navigate the business loan process. Simply complete our 1 minute application to get the process started today.