Running a commercial trucking company can be challenging, before you even get your wheels on the road.  Before you can first open your doors, you must invest in at least one truck. Depending on your business plan, you may want more than one. So, who has to pay for that eighteen-wheeler?

You do, unfortunately. You may not have the capital on-hand to invest in a long-haul truck or two. With commercial truck loans or even a small business loan, you may find yourself on the road sooner rather than later.

Buying a new truck is not your only option. Let’s say you want to upgrade your vehicle or repair an existing long-haul truck for your company; the best commercial truck loans can help you upgrade, while commercial truck repair loans assist with the former.

How Funding Can Help?

Securing funding for commercial or semi-truck financing is vastly different from a personal vehicle loan. For starters, the standard interest rate for commercial used truck loans can range from 5% to 30%, unlike the sub 5% rates for personal auto loans.

Most commercial truck drivers, while business savvy, may not have the funds readily available to outright purchase a truck, upgrade their existing vehicle, or pay for extensive repairs. In these cases, financing is the only route. It’s not a bad option, either.

With a commercial truck loans calculator, you’ll quickly discover how much you’re eligible to borrow, your monthly payments, and commercial truck loans interest rates to get you started.

What Are My Best Options?

When it comes to commercial truck loans, a bank may not be your best option. Whether you require a bad credit commercial truck loan or a commercial truck equity loan, chances are you’re better off with a private lender over a credit union or hometown bank.

Commercial truck financing is available for:

• Buying a new or used commercial truck
• Leasing a new or used commercial truck
• Repairing or upgrading a commercial truck

Equipment Financing

With equipment financing options, the commercial truck you purchase acts as collateral against the loan. Say, for example, you miss a payment. The lending company would seize the truck.

This has both positives and negatives. You do not have to put up any other assets as collateral besides the truck, which is good. If the truck is your only source of income, this may not be so good for your business. If anything were to happen that would prevent you from driving, you may not be able to make payments on time and the lender may  seize your truck.

Business Line of Credit

Technically speaking, as a commercial truck driver, you are a small business-at least, to start. As such, you likely qualify for a business line of credit. A small business line of credit is an unsecured loan solely for businesses without a lump-sum disbursement, in which the loan itself acts like a credit card.

You pay for supplies, equipment, gas, etc. Then you repay the amount spent over time, gradually paying down the balance.

Small Business Loans

If you can prove to the bank or a lending company that your business is a sound investment, with a business plan, resources, and experience, then chances are you will be approved for a small business loan. Although, alternative financing companies do not typically require a business plan to be approved.

The thing about a small business loan is the amount you can borrow varies. In some cases, you may not receive enough to purchase a new truck or jumpstart your trucking company. You may need to pursue other options alongside a small business loan.

How Can I Qualify?

It’s important to note that not all lending companies are equal, some enact lending requirements that significantly vary from their competitors.

The general qualifications for commercial truck loans include:

• Information on the commercial truck you have in mind
• A reputable vendor
• Good credit score
• Time in business
• Zero negative marks on your credit report
• A downpayment
• Trucker’s insurance

You will find that many lending companies flat out refuse to finance a used commercial truck. If your goal is to buy second hand – saving some money in the process – spend a little more time researching lending companies that specifically cover used vehicles.

With these above qualifications in place, most of which are easy enough to achieve, you’ll soon have a commercial truck to start your long-haul or delivery business with little hassle. Even if you don’t have stellar credit, securing a commercial truck loan is possible!

Kickstart your commercial trucking career, and apply now for a commercial truck loan! You’ll get matched with a Business Financing Advisor at ROK to help you find the best option.

When your small business needs funding, an SBA loan may be a great alternative to more common small business loans.

What is an SBA loan?

Simply put, they’re small business loans that are partially backed by the Small Business Association (SBA), a government agency. Because the SBA backs the loan, at least in part, lenders can offer funding on more flexible terms.

Banks and other financial institutions offer SBA loan terms based on the business’s financial records, credit reports, tax returns, and past loan history.

At this point, you might be asking how to get an SBA loan, but you may want to consider a more important question first: how long does it take to get an SBA loan approved?

How Long on Average Does it take for SBA Loan Approval?

In short, SBA loans aren’t known for a fast approval process. Unfortunately, they tend to take about six months, however there are other ways to get you the financing you need in the interim.

Six Months

Yep, you read that correctly. On average, after you apply for an SBA loan, you’ll have to wait six months before you see “approved” on your SBA loan application status.

See, when you submit your SBA loan application to the lending organization, they have to turn around and apply to the SBA to get the loan guaranteed. This multi-step process takes more time than other financing possibilities. If you choose to apply for an SBA loan with ROK, our streamlined process reduces that time to as little as 45 days!

Contributing Factors

On top of that, lenders aren’t always well versed in the SBA loan process, which can extend the time it takes to get approved. And, small business owners are usually required to submit a large amount of information, which can be hard to provide.

Lenders want to see that the small business will be able to make SBA loan payments, which means they’ll want to see credit histories and tax returns. More so, the SBA itself won’t guarantee the loan until they’re sure your business meets their rather stringent requirements.

There are SBA disaster loans available for small businesses impacted by regional and national crises. If you’re wondering how to apply for an SBA disaster loan due to COVID-19 or any regional disaster (floods, hurricanes, etc.), the process is the same but expedited.

That said, even disaster loans take at least 21 days to process, which may not be fast enough, depending on your situation.

What if I need Funding Sooner?

You thought you wanted to know how to apply for an SBA loan, but now you may be wondering about other options. Luckily, there are plenty of other ways to fund your small business needs fast.

Even if you need a small business loan despite bad credit or a lack of time in business, funding options exist. ROK Financial offers both Asset Based Loans and Lines of Credit, which offer same-day funding if approved!

Apply now, and we’ll connect you with a knowledgeable Business Financing Advisor so you can find out which options are right for your small business. The application is simple, and we’re sure that, with our help, you can get back to business!

Amid the 2020 pandemic, restaurant owners have been facing more setbacks than ever when it comes to keeping their business afloat. As a result, they are seeking information on how to get a restaurant business loan.

If you run a restaurant, you more than likely have been looking for ways to improve your restaurant’s finances. There are a few different ways to find support for your business, and in this article, we will be discussing Small Business Administration loans or an SBA loan for restaurant owners.

How Can an SBA Loan Help Your Restaurant

An SBA loan for your restaurant can support your business endeavor in many different ways, which can ultimately help increase your profits.

One of the most commonly sought-after small business loans is the SBA 7(a) loan, which can provide valuable financial backup for essential needs. The SBA 7(a) loan is a good option if you have not had luck securing other means of financial assistance.

Buy Your Restaurant

A startup loan can help if you are still in the beginning stages of setting up your business. One of the biggest roadblocks for aspiring restaurant owners is getting the money to buy a building or even a food truck.

You will need a designated space to cook the food and serve it. With an SBA loan, you can get the backup needed to obtain this space, including purchasing real estate. Furthermore, a loan can help you buy a building for your restaurant and finance the land on which the building sits.

Purchase Equipment

Once you’ve purchased or rented space, you will also need to buy the many pieces of equipment necessary to keep a restaurant running, and it doesn’t come cheap. A loan can help increase the range of restaurant equipment, and quality, available to you.

Equipment Financing for Restaurants

Equipment financing for restaurants is often a necessity. A restaurant can’t function without the proper equipment, and having access to the right equipment can make or break a restaurant, especially within the first year.

The SBA 7(a) loan covers restaurants’ financing, and it will cover certain staples you need to stay open. Restaurant equipment financing can cover POS systems, ovens, fryers, shelves, office equipment, and more.

What This Means for Your Business

SBA loan qualification will make a big difference in achieving the necessary restaurant funding to get your eatery started. It can also take some of the weight off your shoulders, so you can focus on creating something special.

Large expenses, such as real estate and equipment purchases, will be less of a worry once you have been able to secure financing. However, the challenges don’t end here, as there will still be a lot of investing and personal funds needed to keep the restaurant running smoothly.

Overall, however, securing loans to buy your restaurant and fund equipment purchases can ease your journey into small business ownership. It can take time to turn a profit, particularly when you have loan payments, but many startup loan options for restaurants have flexible terms and low rates.

Of course, there are limitations to what you can use the funds for, and the amount you can borrow depends on a handful of factors.

How Can I Qualify?

Like any government loan, there are certain conditions in which a business owner will not qualify for an SBA loan. Even if you meet the qualifications and do not have bad credit, or former business startup loans, there is no guaranteed loan approval. Unfortunately, the myth of “guaranteed” loans is just that; there are many qualification metrics and minimum standards for SBA loans.

Owners who are applying for an SBA loan will need to meet these standards to qualify for a loan:

• The business must be working for profit. These loans are not available for non-profit organizations.
• The owner of the business cannot be on any form of parole.
• The business must be run and make a profit in the US or the US territories.
• If you have been able to secure other forms of financial assistance for your restaurant, you must first use those resources.
• The business owner must have invested, either with money or with property, equity into the business.

If you have met all of the above qualifications, you will likely qualify for an SBA loan. Keep in mind that the SBA itself is not the business lending you money. SBA loans are available through banks, credit unions, or other institutions centered around lending money.

And of course, with any loan, you will deal with terms and conditions. These terms specify how much money you will be receiving and for how long. It is important to hold on to and remember all the information about your business loans collected during the process.

What Are My Options?

The SBA 7(a) loan is an example of one of many SBA restaurant loans. Depending on the restaurant and business you are running, you may find that other restaurant loan options suit your funding needs better. Before sorting through all of your options, it would be wise to speak with a Business Financing Advisor. You can speak to an advisor today for free by completing ROK’s 15 second online application!

Finding an investor for a restaurant can play an important role in how the restaurant succeeds. Personal networking is a good place to start, but some banks may be willing to work with you on finding support. Research and looking at how to find investors for a restaurant can also give you a good idea of how much money you will need to start your business.

There are also the SBA Express Loan, the SBA 504 Loan, the SBA CAPLines, and the SBA Veterans Advantage Loan. These loans are viable options depending on the needs of the restaurant. They are each catered to specific demands that may come up depending on the business you are running.

We recommend surveying your restaurant’s business and identifying what you need finance-wise. It is a good idea to have a strong understanding of what your business needs to run based on your restaurant’s location and size. Obtaining an SBA loan for restaurant owners may not be simple, but it’s an excellent step toward your future as a small business owner.

Many entrepreneurs require a small business loan to get started; however, choosing the right business loan can be intimidating. Fortunately, there are several different avenues of business loans to choose from, including an SBA loan.

What is an SBA loan? What is an SBA 504 loan? How does it work? What is the difference between an SBA 504 loan versus other SBA loan programs?

What is an SBA Loan?

With an SBA loan, the US Small Business Administration partners with lenders to get loans for small businesses. Rather than directly giving money to small business owners, the SBA sets criteria for loans.

The rationale behind using this lending model is that it poses less risk for lenders and lending organizations, which makes small businesses receiving a loan a much more straightforward process. Here are some other advantages of using an SBA loan:

• Competitive rates and fees
• Potentially unique perks involved such as no collateral or lowered down payments
• Continued loan counseling

What Can SBA Loans Be Used For?

This entirely depends on the particular SBA loan you apply for, but you can use SBA loans for the following:

• Purchasing equipment
• Startup funding
• Purchasing real estate
• Business expansion
• Functioning capital

SBA Loan Requirements

SBA loans have specific requirements for a business, including:

• Having depleted other financing options
• Must be located in the US
• Have to be operating in and approved by the SBA
• Hold a business status of for-profit
• Must be part of SBA size standards

SBA Loan Payment

Fortunately, SBA loans are among the more affordable small business loan options. The average interest rates on SBA loans are 7-8%. However, the SBA does charge a fee for a loan guarantee, but they waive (the fee) for loans up to $150,000.

The amount of the SBA loan payment each month depends entirely on each individual business’s situation. Make loan payments online, by mail, or via telephone.

How to Apply for an SBA Loan

Before applying for an SBA loan, it’s best to speak to a Business Financing Advisor to determine your business’s most ideal financing options. If an SBA loan is the best avenue of funding for your business, apply now or visit the official SBA website for an SBA loan application.

What is an SBA 504 Loan?

An SBA 504 loan, aka an SBA CDC/504 loan, provides small businesses financing on a long-term basis for assets not likely to be quickly turned into profit, such as buildings, equipment, land, and more. People commonly call this loan a commercial real estate loan.

One characteristic that sets SBA 504 loans apart from other SBA loans is that these three entities are needed to issue the loan:

• SBA-approved certified development company (CDC)
• The borrower
• The bank

Here are some advantages to using an SBA 504 loan:

• Competitive interest rates with a potential fixed loan rate
• Backed by the SBA
• Lower down payments
• Own rather than rent/lease fixed assets
• Business owner receives real estate appreciation and tax perks
• Lower fees than other small business loans
• Long-term coverage
• The majority of small businesses are eligible

How Does the SBA 504 Loan Work?

The SBA 504 loan works differently than other SBA loans that are typically halfway guaranteed by the SBA and given by an official SBA lending associate. With the SBA 504 loan, there is a specific breakdown of percentages involved:

• 10%-Down payment from the small business owner/borrower
• 40%-Loan provided from a CDC; an SBA approved business that promotes facilitate economic success
• 50%-bank loan or another lending organization

SBA 504 Loan Rates

SBA 504 loan rates consist of interest rates from both the CDC and the bank’s loan contributions. The SBA determines the CDC rates, and after a tedious calculation process, the CDC interest rates usually range between 3-6% and are fixed.

The bank portion of the loan varies considerably because the borrower and the small business’s quality determine the interest rate. Bank loan rates are higher than the CDC’s and can be variable or fixed depending on the bank’s discretion; however, they do not typically go above 10%.

What’s the Difference Between an SBA 504 and an SBA 7A?

Both are small business loans, but they have more differences than similarities. For example, an SBA 504 is geared for fixed assets, whereas the SBA 7A covers more of a broad range and covers anything from purchasing buildings to business supplies. The SBA 7A can also be an option for short or long-term financing, and the SBA 504 covers long-term.

Both also vary widely in loan terms, depending on what each loan covers. The SBA 7A is also a considerably lower loan size, has both variable and fixed rates, and requires a minimum of 10% from the loan applicant.

Other SBA Loan Programs

SBA Disaster Loans

The SBA Disaster Loan is a lower interest rate loan covering businesses after they’ve encountered a significant event or catastrophe. SBA Disaster Loans essentially keep companies from going out of business, can cover damages unpaid by FEMA or insurance, and cover operating costs lost due to the event.

Economic Injury Disaster Loans

Economic Injury Disaster Loans, or EIDLs, are small business loans that help struggling organizations during temporary loss of income. The SBA is currently issuing many EIDLs due to the COVID-19 pandemic, including the new part of the EIDL grant, called the Paycheck Protection Program. The PPP gives small business employees paychecks affected by shut-downs during the pandemic.

If you’d like to start an EIDL loan application, check EIDL loan status, or apply for an SBA EIDL grant, click here to get started.

If you’ve already applied for an EIDL loan and need more funding, check out options for asset-based loans.

Summary

SBA loans are useful, government-backed financing options that can be used for various small business expenses, depending on the SBA loan. There are several different SBA loans to apply for, but if you need long-term financing for fixed assets, then the SBA 404 loan is appropriate. If your business needs broader financing coverage, look into an SBA 7A.

For businesses experiencing financial hardship due to the pandemic or significant events, applying for an SBA disaster loan, EIDL, or EIDL grants would be suitable options. For more information, visit our apply now to speak with an advisor today!

Bad Credit? Know Your Options

If you are a trucking business owner, you know how essential your transportation business is, especially during the pandemic.

Several companies are struggling to stay afloat in these times, and it is not always easy to decide where to look for a loan. The situation can feel particularly hopeless if you feel that you have a bad credit score that prevents you from applying.

It is true that as a trucking company with bad credit, receiving a loan can be difficult. But it depends on where you are looking for financing. There are various types of small business loans you can apply for when you need financing for your trucking business.

Financial Benefits for Your Trucking Business

The first of the options for trucking business loans is equipment financing. If you are unfamiliar with the term equipment financing, it is a type of loan that trucking businesses can use to purchase equipment.

The idea is that instead of using your capital from the business you own, you can use this type of financing to cover the many equipment costs that trucking companies often need. After paying off the loan and interest over a planned period of time, you will own the equipment.

Luckily for smaller trucking businesses, things like equipment financing do not necessarily require you to pay large amounts out of pocket for your trucks and other equipment. This type of financing also means you have more time and money of your own to help your business and increase capital.

A more flexible loan option is a business line of credit. You have access to receiving funds as you need them, rather than taking out a fixed amount. This option can help you maintain your credit score, as it allows you to focus on small business loans where they are needed, making it easier to pay back debt on time.

You only have to pay interest on the funds you use at a certain time, and not the full line of credit. Your payback schedule depends on who you lend from, but it can be a weekly, monthly, or another set schedule.

Business lines of credit can help those who want the opportunity to grow their business but need help to do so. There are both secured and unsecured business lines of credit. With a secured business line of credit, you can choose which asset you will use for collateral.

The secured option may be the necessary option over an unsecured business line of credit if:

• Your business has not operated long enough per usual loan requirements.
• Your business has had credit difficulties in the past.

For unsecured business lines of credit, you do not need an asset for collateral. However, unsecured loans tend to be a higher risk for the lender. Therefore there may still be some security needed on their end in the form of a lien. It’s better if your trucking business has a good credit score for this option, but you can still apply and speak to an advisor.

Just Starting Your Trucking Business?

If you are starting your trucking business, you may be eligible for startup funding as a form of business loan. It can generally be challenging to get a loan when your business is six months old or less, and if your monthly revenue is lower than a certain amount.

You can apply for startup business loans for trucking here if you have been in business for less than six months, and your monthly revenue is $15,000 or less. These aspects of your trucking business might not qualify you for financing. However, it may be beneficial to speak with an advisor to go over your options.

How to Apply

If you are looking to apply for a business loan for your trucking company, you can easily apply for one of the options here. To make sure of the right opportunity for your trucking business, consider the following things:

• What are the business loan costs
• Is your APR manageable?
• Does your business have its own credit history, or will you have to use your personal score?
• How long has your business been in operation?
• Should you receive your loan from a bank or online lender?

Most of these questions have to do with credit scores and interest rates and what the lender offers you with those factors. For example, if your trucking business is fairly new or has no credit history, you may have to use your personal credit score to determine if you are eligible for a loan.

Bad credit scores also usually mean higher interest rates to pay back. If you can pay back a manageable loan, this can improve your credit score, particularly if you pay each payment back on time.

When searching for lenders, you want to make sure you are offered loans with good terms, such as fewer documents for approval, higher approval rates, and fast access and turnaround times.

Conclusion

The economy needs your trucking business, no matter how small. Receiving a business loan for your trucking company is still possible with a bad credit score. Make sure to check your options and apply to what best suits your company’s needs.

If we have learned one thing from this year, it would be that nothing is set in stone, things can happen that are out of our control. As a business owner, these hiccups can be detrimental to your business’s success. One industry that has been affected recently would be the clothing retail industry. Luckily, there are financing options in place to help when these hiccups happen.  Small Business Loans are a great way to upgrade your business, extend your cash flow, or to cover a hiccup. There are many options when it comes to finding the best business loan for your clothing store. 

Advantages of Obtaining a Small Business Loan

There are many reasons why a Small Business Loan would be beneficial for your business. They can be utilized to expand your business, hire new staff, supplement cash flow, and more. Whether it’s a loan for a small retail shop or an expanding business, there are many benefits. 

Easier Access to Capital

For businesses that are financially struggling, small business loans are the most accessible capital available. Banks are typically more cautious when it comes to approving businesses, especially when fluctuating finances. 

Repayment Terms

Most small business loans have pretty flexible repayment periods, making them a better option than other alternatives. SBA Loans offer some of the longest repayment terms available, offering up to 25 years depending on your situation. 

Building Your Business Credit

Receiving funding for a small business loan through your business can help you establish credit and build your business’s credit history. Building this positive credit history can provide your business with more loan options in the future. 

Supplementing Cash Flow 

It is common for businesses to experience cash flow fluctuations. A small business loan is helpful during these fluctuations to help supplement cash flow during a slow season. Having that cash flow cushion will also bring peace of mind that if needed, your business is taken care of. 

What it takes to Qualify for a Business Loan

Most Small Business Loan requirements 

• 3+ Months in Business: You can qualify for our top financing options with as little as 3+months in business. 
• Although limited, there still are Startup Funding options when in business for less than 3 months. 
• $15,000+ Monthly Gross Sales: The minimum revenue to qualify for financing options are $15,000 per month, or $180,000 in annual gross sales.
• No Minimum FICO: There are financing options for all credit profiles. There is no minimum FICO score required to apply! 

Not sure how to apply for a Small Business Loan? It’s easy! Complete our Simple 15-second Business Loan Application today and qualify for a Small Business Loan in 12-48 hours!

How Can Your Clothing Store Use Funding?

Cash Flow: A common challenge all retailers face is fluctuating cash flow. This can affect many things, like keeping up with inventory of the latest trends and popular items. Keeping up with inventory is essential when owning a clothing store. Making sure you have the capital to keep inventory stocked is essential in your business’s success. 

Hiring New Employees: With business growth comes the need for expansion and hiring more staff. In order to do so, you need the funds to do so. Expanding and hiring new employees is an investment, make sure you have the funds to invest. 

Payroll: One of the most important and cash flow dependent variables when owning a small business. Not making payroll can be detrimental to your business, retaining your staff is pivotal. Having that extra capital can be extremely helpful when experiencing a slow period in sales.

Advertising: A social presence and quality advertising is very important in our media saturated society. Having extra capital to produce quality advertising, such as social media, email marketing campaigns, physical hardcopy flyers, etc,  can launch your business to newer heights. 

Applying for a small business loan can be overwhelming, especially if you’re not sure who qualifies for a small business loan. Figuring out what option is best for your small business is important. Our business advisors are ready to help you find the best small business loan for your store! 

When a person takes out a loan, they have every intention of paying the loan back again, both personally and in business. However, sometimes circumstances overwhelm a situation to the point that an individual can’t pay back their loan and may default on it, but what happens if you default on an unsecured business loan?

Understanding what it means to default on an unsecured business loan right off the bat can help you make smart and responsible choices going forward.

Curious About Unsecured Business Loans?

An unsecured business loan can be an unsecured small business loan or startup funding if you’re new and don’t have established credit or collateral. An example of a secured business loan would be an asset-based loan, wherein the borrower possesses forms of collateral, such as real estate or equipment.

You can use an unsecured business loan calculator to get an idea of what your unsecured business loan rates would be if you’re just starting and need a reference. Keep in mind that the average interest rate for a small business loan can vary depending on many factors.

To understand what happens when you don’t pay back a small business unsecured loan or startup fund, you need to understand what an unsecured business loan is.

What Is An Unsecured Business Loan?

An unsecured business loan is a loan that doesn’t require collateral from a lender. There are many options for acquiring an unsecured business loan, including getting an SBA loan. This is a government-backed loan that sets guidelines to reduce the risk for lenders.

What Are the Consequences of Defaulting on an Unsecured Business Loan?

Negotiation, assessment, and refinancing are all advisable courses before defaulting, but if these don’t pan out, there are a few unsecured business loan default consequences:

• The loan potentially getting turned over to a collection agency
• Legal judgment against you or your company by the lender
• Your credit score is negatively affected

Although an unsecured business loan includes no collateral, your assets may still be at risk, even ones that are not associated with the business. Putting your personal finances and possessions on the line is often a part of a personal guarantee you’re often asked to give when getting an unsecured business loan.

What Is Personal Guarantee?

A personal guarantee is a person’s legal promise to repay the money lent to them by an institution. It’s the promise given in the absence of a business’ assets, which is common if you’re a startup and lack such assets.

If the loan is not repaid, payments are missed, and defaulting occurs, then a personal guarantee permits lenders to appropriate assets available to them to compensate for the loan.

Summary

It’s never a good idea to default on any type of business loan. If unfortunate events have affected your business it’s always best to reach out to your lender to discuss possible options. This prevents putting your personal assets on the line and risking legal charges and a tarnished credit score. Properly assessing your circumstances before getting a loan can help avoid this situation. You can consult ROK Business Financing Advisors to navigate options before acquiring a loan and if you need further help to keep yourself on track.

Construction financial management can sometimes see unique situations, and have to adapt quickly. A contractor has to deal with a myriad of matters, including equipment costs, payroll, materials, permits and licensing, insurance, and more. To streamline the process, what you need to know is how to plan your growth with a construction business line of credit. You need answers to questions like ‘how can I apply for a line of credit for a construction business?’

Construction Business Line of Credit

A construction line of credit is a financial instrument that allows your business to maintain operations by having extra cash on hand to: cover invoices on time, manage payroll and make purchases that allow you to keep projects alive. A line of credit allows for business growth, letting entrepreneurs operate with peace of mind.

A Line of Credit Can Grow Your Business

A line of credit gives you power. It benefits the construction business in many ways. Here are a few.

More Freedom

Financing like this is invaluable for managing costs and building growth. You enjoy greater flexibility as the business will have access to funds for paying bills or taking on new opportunities. You can expand the business, your creditworthiness, and your reputation.

Working Capital

Construction costs can be overwhelming. Through lines of credit, you always have cash on hand to manage your projects and expenses. This can be beneficial during slow sales cycles.

Getting Equipment

Not having what you need is a deterrent to being ready. A line of credit lets you rent or purchase as needed. Use it for skid steers, excavators, and other equipment that lets your team perform safely, timely, and effectively.

Hire On-demand

Your equipment is useless without licensed and trustworthy contractors. Your projects rise or fall on the talent you can afford. Lines of credit make it easier to hire extra contractors as needed or to invest in ones with greater experience and training.

Plan Your Growth

Business growth is about anticipating core construction business metrics, steps, and decisions in an effort to make things happen. These understandings have to align with your vision of the business’s future. It’s not only about explaining your intentions to clients, investors, and lenders but about what you expect.

Your financial future has to be part of the vision. You can retool an original financial plan, taking expansion into account. Break plans down by time periods with ideas of how each new year (or five year) period will end. Plans should answer these questions (and more, based on your anticipations):

• Where do I need to expand?
• What equipment do we need?
• Do we need to grow staff?
• What resources will improve production?
• What should my cash flow look like?
• Will financing be needed? How much?

Financial Projections

Financial projections can be based on where you want to build on sales forecasts and anticipated expenses. For instance, if you have tight cash flows, project and manage closer projection periods. Include a profit and loss statement and balance sheets.

Along with a sound history, well-prepared projections encourage credit lenders to work with you. Talk with financing partners. Work with current entities or, after you’ve built a reliable credit history, reach out to ones who offer greater opportunities. Even if you go in as a risk, knowing how to qualify for a construction loan with bad credit can improve your odds.

Efficiency, growth, and getting optimal lines of credit will require a detailed overview of operational needs. You have to know your construction business’s potential volume of output, individual employee output, costs of supply chain stages, and how a line of credit can balance things.

Lenders like the idea of tightly controlled expenses. Your operations plan will determine if a lender can trust your judgment with their money. Hopefully, your past with credit lenders will streamline the process. If you’re new, conduct your due diligence. Once you’ve entered into a contract, it may be difficult to change.

Requirements for Getting a Construction Credit Line

For a construction credit line, you’ll have a better cash flow, especially during slow periods. You’ll also have the funds to manage expenses, improve the adaptability of your processes, and build your business credit.

A lender may ask you to have some personal history in the construction industry to validate your trustworthiness. You’ll also need good personal credit. You don’t exactly need strong business financials, even if you’re working with a lender that already knows you. They have to see that you can repay on time. Lenders will want repayment sources. This is usually proof of payments expected from customers and clients.

At the minimum, lenders may need no less than six months in business and no less than monthly revenue of $15,000 to consider you. Lenders may not bring up a credit score needed for a construction loan, but a good score of 600 or higher wouldn’t hurt.

Lastly, online lenders have leaner qualifications. But these entities are definitely more likely to have lower credit limits and higher interest rates.

The Other Side of The Coin

You may be wondering, what are disadvantages of holding a line of credit?

• Depending on the lender and terms, fees and charges can add up. Pay-as-you-go isn’t ideal, even at low-interest rates. Compare annual fees, dig out additional costs, determine which financial product works best for you.
• Cash-on-hand can be easily mismanaged. A credit line should be an insurance policy when cash is short, not a go-to. Anyone can abuse funds and, unable to repay balances, you run the potential of ruining your business and reputation.
• Lines of credit may come in low borrowing amounts. This means they may not be able to provide exactly what you need at any given time.

Conclusion

Your construction business will always need plans for cash flow generation. It’s the only way to derive maximum profits and project product and service availability. With the construction business plan, you’ll be able to manage all stages of your supply chains in affordable, practical ways and, most importantly, grow your construction business. To learn more about a Construction Line of credit, apply with ROK financial to speak with a Business Financing Advisor today.

The U.S. Small Business Administration (SBA) offers disaster loans to businesses that have been affected by major events. The loans provide operating capital to get you through a hard time. What can you do with the loan? What happens if things don’t turn around, though? Can SBA disaster loans be forgiven?

How do SBA Disaster Loans Help Your Business?

First, you need to understand what an SBA disaster loan covers to help your business. They help keep your business going during and after a disaster. They can be used to rebuild if damages aren’t covered by FEMA ( Federal Emergency Management Agency) or insurance. They also help you cover operating expenses that were lost because of the disaster.

They are low-interest-rate loans to get your doors back open and keep you going until you can start making money naturally after the disaster. Most of the SBA coronavirus loans are economic injury disaster loans, which are known as EIDLs. They help business owners meet financial obligations that they couldn’t due to the pandemic.

Part of the EIDL grant is a new program called the Paycheck Protection Program (PPP). These are loans that were explicitly meant to keep your payroll going and keep your employees hired during the shutdowns from COVID-19. They are incredibly low interest but have a narrower use then EIDLs.

If you are wondering how to apply for an EIDL grant, follow the steps shown here, and you will get started on the process. If you need funds for other reasons, you can look into asset based loans or account receivable financing. If you already have one and need SBA economic injury disaster loan forgiveness, please continue reading.

Can SBA Disaster Loans be Forgiven?

Some SBA Disaster loans do qualify to be forgiven. You have to check before you take any loan to ensure that it offers forgiveness and what the parameters are for that feature.

For EIDL forgiveness, there are a few parameters. The only part of the loan that can be forgiven is the EIDL Advance. The rest of the EIDL loan does not qualify, and that part has to be paid off over 30 years.

The PPP is eligible for forgiveness as well. If the company uses the entire loan on the allowed bills within a period of 8 to 24 weeks after disbursement, you could qualify for forgiveness. All you have to do is apply for it up to ten months after your payment period.

Terms and Facts You Need to Know

The following are terms and facts you need to know about SBA disaster loans:

How Much Can You Get?

The specific amount you can get from an economic disaster loan is affected by many factors. Your SBA EILD grant will consider what you lost during the disaster, how your business does in a typical year, and your credit history to set an amount. However, the maximum amount you can get for EIDL is $150,000. You can get the lesser of 2.5 times your monthly payroll costs or $10 million for PPP.

How Long Is the Loan?

SBA loan payments can be set at a few different dates. Your PPP can be over two or five years. Your EIDL is over 30 years. EIDL is payment free for 12 months after you get them. The PPP is payment free for ten months after the end of the covered period, either 8 or 24 weeks.

How Much is My Interest Rates?

Your SBA COVID loan has a low-interest rate. For your PPP, it is a fixed 1 percent. For your EIDL loan, it is 3.5 percent.

What Steps Can You Take to Prepare?

Wondering what steps you should take to prepare for SBA disaster loans? Here they are:

Before You Apply

There are a few documents you are going to want to have ready. Having all this information ready will make the SBA EIDL loan application go easier and move more quickly.

First, you want to make sure you have all your organizational documents ready. You will want information on how and how much your business has been affected by the crises. This proof includes lost revenues, canceled contracts, and supply chain interruptions.

You will then want financial statements ready, including your current bills and payroll information, income tax statements, and financial statements for the last three years. You’ll also need debt tables, cash flow info, and sales history.

Checking your credit reports could also be helpful, especially if you explain the negative scores they may have. Knowing your credit report is a good idea at any time, but before you seek a loan, it is essential.

Apply for the Loan

Once you have all this information, you will be ready to start your EIDL loan application. You can apply online, in person, or over the phone. Have all the paperwork you already gathered ready for this portion, and it will go smoothly.

Your Request is Verified

Your application will go through a verification process to make sure that everything is represented correctly. At this point, a loan specialist will consider your EIDL loan status and will decide whether you get the money or not.

Getting Funded!

If it is approved, you will sign for the loan, and you will get your initial money within five business days after closing. The loan terms can be adjusted depending on continuing changes with the disaster and your financial situation. This can include more money, different terms, and possible loan forgiveness.

Requesting Forgiveness on your SBA Disaster Loan

If you already received your SBA EIDL grant and wonder if an SBA disaster loan can be forgiven, you can apply and find out. The EIDL advance is forgiven from the start. All you have to do is keep documentation that proves it was used for the correct purposes. This may not be asked for directly, but it is important to have.

You will need your tax forms from the period, payment receipts, and account statements for all bills and payroll paid for with the payment. You will also need one of the SBA Forms 3508, 3508EZ, or 3508S. Your loan provider will let you know which one you need. Fill out the proper form, and your request for forgiveness will be reviewed.

Business can be a thrilling adventure, but it can cause a lot of stress when major disasters occur. When the worst happens, it can take everything you have to stay in business. Now that you know how to get an SBA loan and if SBA disaster loans can be forgiven, hopefully, you can get it and keep the doors open for years to come.

Speak To An Advisor Today

If you’re interested in applying for an EIDL, PPP, or SBA loan today, complete our simple online application and speak with a Business Financing Advisor. We’ll work with you to understand your needs and provide you with the best options available.

If you’re a small business owner in need of extra funds, you may be interested in a merchant cash advance.

You probably have a few questions, like: how does a merchant cash advance work? And, can I qualify for a merchant cash advance with bad credit?

A merchant cash advance may be the ideal solution to your small business cash flow needs, but it’s not always the most appropriate option. Let’s explore how merchant cash advance loans work so you can decide if it’s right for your small business.

What is a Merchant Cash Advance?

Let’s start by answering the most basic question: what is a merchant cash advance?

A merchant cash advance (MCA) is when a financing company provides money upfront in exchange for a portion of the business’s future sales. It’s not a loan, it’s a cash advance, which has its own benefits and caveats attached.

Business owners use merchant cash advances in industries where credit and debit card sales are the primary forms of transactions. Restaurants, retail shops, repair shops, and so forth easily fall into this category.

For an MCA, the provider will typically look at daily credit card sales receipts for the business. Based on the number of sales, the provider will determine how much cash they can provide. The receipts also help providers calculate how quickly a business will pay back the advance.

A percentage of every credit or debit card sale is directly transferred to the provider to pay back the advance. So, for a cash-short business, MCAs provide fast money that’s only due as the business accumulates sales. For many business owners, that’s an ideal trade.

How Does it Help Your Business?

Now that we know what a merchant cash advance is, let’s look at a few ways it can help your business.

Quick Money

As mentioned, an MCA provides money quickly, sometimes in as little as a few hours. For a small business owner, that can be a huge benefit.

Maybe there’s a short term opportunity you want to take advantage of, or perhaps you need a little help getting through a slow period. Either way, a merchant cash advance may be a good idea.

Repayment as a Percentage of Sales

Another plus to merchant cash advances is the repayment method. Since a business pays back MCAs using a fixed percentage of sales, repayment automatically adjusts based on how your business is doing.

If there aren’t any sales on a given day, you don’t pay anything to the MCA provider. Alternatively, if your sales are high, you end up repaying the advance that much faster.

Forgo Traditional Loan Requirements

Merchant cash advances also forgo typical loan requirements. Because you’re not working with a bank, you don’t have to provide collateral. And you don’t have to have good credit.

That said, you may need to provide a personal guarantee. That’s a signed document which makes you accountable should you fail to pay back the MCA.

What Type of Business Can Benefit?

Like we said, any business that relies on credit or debit card sales can use a merchant cash advance. Restaurants, auto repair shops, contractors, retail shops, and many other small businesses can benefit from them.

In general, if a small business needs cash to take advantage of an opportunity or issue, an MCA is a good option. Maybe inventory is available at a discounted rate, and you want to purchase it in bulk. Or, maybe your store’s heating system went down, and you need to repair it fast.

A merchant cash advance for startups is a possibility as well. If a startup business cannot secure traditional financing, sometimes a merchant cash advance is an option.

Typically MCA providers want to see that your business has been successful for at least three months, which disqualifies many new businesses.

If you own a business and have bad credit, a merchant cash advance might be your best bet for quick cash flow solutions because a good credit score isn’t required.

The provider may still pull your credit score during the application process. However, unlike traditional financing options, a poor score will not negate your chance of receiving a merchant cash advance.

Can I Qualify?

If your business relies heavily on credit and debit card sales, you likely qualify for a merchant cash advance. That’s true even if you have poor credit or wouldn’t qualify for a traditional loan.

You’ll need to fill out a quick application that asks for basic information like how many years you’ve been in business. The provider will also ask for annual or monthly sales numbers.

At ROK Financial, there’s no minimum FICO credit score required for a merchant cash advance. As long as you’ve been in business for at least three months with $15k in monthly sales, you’ll likely qualify for a top-financing option.

Knowing Your Options

Merchant cash advances are a great way to fix cash flow issues, but they’re not your only course of action. Other financing options may be a better fit given your situation.

• Small Business Loans are available to any business that needs to stabilize its operations. They come from banks as well as other lending companies and have traditional terms. Your sales don’t need to come from credit or debit cards.

• Startup Funding works well if you’re starting a business from scratch. Good credit is required, but you don’t need to show time in business or monthly sales records.

• Business Lines of Credit exist so that businesses can scale-up as they grow. The lender won’t provide funds as a lump sum but instead makes them available as needed.

Frequently Asked Questions

At this point, you may have a few questions about the ins and outs of merchant cash advances. Let’s see if we can answer them.

What Happens if I Default on an MCA?

When someone gives you a cash advance, it’s always best practice to pay it back. Given that MCA’s are paid back automatically as sales come in, this shouldn’t be a problem.

But, of course, sometimes it is an issue and what happens next depends on various factors. If your business closes, you’re not responsible for paying back the MCA. However, should you ever reopen the business, you retain responsibility for paying back the advance.

More so, if there’s any indication of fraud, the MCA provider can pursue legal channels to recoup their investment.

Will a Merchant Cash Advance Hurt My Credit Score?

Taking out a merchant cash advance has no direct impact on credit scores. Securing one does not hurt your credit score, and paying it off does not help your credit, either.

Do You Pay Interest on a Merchant Cash Advance?

It’s technically not interest; it’s a factor rate or fee. With an MCA, traditional lending terms don’t apply, but the concept is similar.

Factor fees usually vary but will be based on the provider’s evaluation of your business.

Merchant cash advance business loans are one way to secure fast cash for your business, even if you have bad credit. Talk to a ROK Financial advisor today and learn if it’s the right option for your business in a matter of minutes.