If you’ve ever looked into obtaining a small business loan, you know that the options can sometimes get overwhelming. Luckily, you can narrow your search to find the best small business loan option for you and your small business.
Whether you want something small and short-term or a larger amount and long-term, you can get the money you need to grow your business.
Keep reading to learn about the best small business loan options for your business.
How Does a Small Business Loan Work?
A small business loan works a little differently depending on the type of loan, but any of them can help you fund your business. Consider a few small business loan small business loan options and learn †how they work.
Small Business Term Loans
These small business loans have a set term, so you will get the full loan amount upfront. Then, you will make monthly payments over a certain period. Throughout the term, you will pay back the loan amount plus interest, and the term can be as short as a year, or it could last up to ten years.
Business Line of Credit
In some cases, the best way to get business funding is to opt for a business line of credit. You use it the same way you would use a credit card. The credit line will have a maximum amount, and you will have to pay back what you spend from the credit line.
Merchant Cash Advance
If you have credit card sales, you can get a cash advance on future sales. You will use a percentage of your credit card sales to pay the advance back to your lender.
Requirements to Apply for a Small Business Loan
All business financing options have requirements in order for you to qualify and apply for a loan. Be sure to keep in mind some of the documents you need to apply for small business loans for Coronavirus relief or other types of government aid.
Income Statements & Bank Statements
An income statement shows how much money your business has earned. It can show lenders that you have revenue coming in and that you are able to pay the loan back. This can be provided in the form of a business bank statement, a bank statement may be required in addition to an income statement.
Your balance sheet reports your business’s liabilities and assets. If you have investors or shareholders, the balance sheet will include their equity. A balance sheet can help lenders better determine the financial status of your business. This is not always required, but may be requested depending on the level of risk involved.
It’s great to have these documents handy, but it may not be required if sufficient bank statements are provided. The tax returns can show how much you earned from the business as personal income. It can also show how much you and your business have paid in income tax.
Lenders may also ask for a copy of your driver’s license or another personal ID. The ID can prove you own the business and are who you say. Then, you can get the best small business loan rates for your business.
Articles of Incorporation
If you have an LLC, S-corp, or C-corp, you will need to submit a copy of your articles of incorporation to show when you started the business.
How Do I Obtain a Small Business Loan?
Before you apply for a small business loan, you should consider what you plan to use the money for. You should also know if you have a good credit score or if you’ll need to look at the best options for small businesses with bad credit.
After that, gather all of your business documents to help you apply. Keep track of these documents in case you don’t get approved for your first loan so that you can make future applications easier.
Next, choose the type of loan you want, such as a term loan or a business line of credit. Once you choose your loan, you can apply online or talk to the lender on the phone or in person. ROK Financial helps with this process by finding the best lender that would fit your needs, and work on your behalf to get your best financing offer.
Best Options When You Have Poor Credit
Unfortunately, it can be hard to get a small business loan when you don’t have good credit. The good news is that there are many options if you do have bad credit.
One of the best small business loans for business owners with bad credit is a business line of credit. This loan can be flexible, and you only need to pay the amount that you use from the credit line.
If you just need a short-term credit line, it shouldn’t be too hard to qualify, even with a bad credit score. You can also save money in interest if you only need money for a few months.
A long-term credit line is another excellent option if you need money for more than a year or so. It can be hard to qualify for a credit line, but they usually have better interest rates than short-term credit lines.
Where to Apply for a Small Business Loan
Whether you’re looking for a small business loan for COVID-19 relief, or you need the best long-term small business loans, you should consider where to apply. Fortunately, you have many options for where to apply for a loan. Consider a few of them.
Speak With a ROK Business Financing Advisor
If you want to make your application the best it can be, work with a Business Financing Advisor at ROK Financial. Your Advisor can walk you through the process and help you organize everything. Then, you can give yourself the best chance of getting the best small business loans for minorities or in general.
If you want a small business term loan, you can go to your bank to get the funding. You can work with a loan specialist to apply, and you can have them deposit the money right into your account.
The SBA has multiple loan programs to help small business owners. You can apply for loans specifically for COVID-19 relief, such as the Paycheck Protection Program (PPP). Still, the SBA also has loans that you can apply for at any time, so you can compare the best loans for you.
The Best Small Business Loans
Whether you have bad credit or not, you should consider where to get the best small business loans for you. If your business has struggled financially, a loan can help. But make sure you consider your options so that you can choose a loan that meets your needs without adding extra stress.
About the Author, Madison Taylor
Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.