Choosing the Best Business Financing Loan Program
We offer business financing options for a wide variety of business owners nationwide. No matter what, there will be a time where you need access to funding solutions. Whether it’s to expand your current operation, hire new team members, cover cash flow, purchase real estate, or simply grow and move forward — funds are a necessity.
Traditional banks have limited financing products and they are well known for strict guidelines to get a bank loan. AdvancePoint Capital’s marketplace has a wide range of business finance products to choose from. Product development is always something we look for out in the business finance marketplace. We can help you find a variety of other business financing options and are experts in small business lending. Let us be your guide and navigate you through the process of finding money for you.
How Do You Finance a Business?
While the traditional route of going through established banks for financing a business oftentimes is reliable for rates and terms, it’s not necessarily the most convenient and speedy way to get the cash you need now. Lengthy processes can be a massive burden for an operation, putting a cog in their wheel of operations and causing issues in the short term. Furthermore, traditional funding from banks has extremely high qualification standards, requiring great scores and longer time in business than alternative funding opportunities. Now, we’re blessed with a wide variety of business financing possibilities through traditional routes such as banks, government-guaranteed loans, and alternative online lenders like AdvancePoint Capital. Small businesses have more options than ever before through these lenders, with more and more access to financing options that fit their exact needs. Whether it’s with a business line of credit, term loans, business credit cards, and more — top lenders are offering incredible opportunities for business owners like you.
What Are Your Small Business Financing Options?
When it comes to offering business financing nationwide, AdvancePoint Capital has an incredible amount of resources, tools, and options that business owners can take advantage of. Through various loan products, cash advances, lines of credit, and more — you can find the right funding for the right time.
Small Business Loan (Term Loans)
A traditional term loan is similar to that of traditional bank loans in that it is a fixed amount of money provided up front, with a fixed cost, fixed term, and fixed payment. Online lenders offer incredible speed when looking to take advantage of term loans compared to bank loans.
- Loan Amount Limits: $10,000 to $1,000,000
- Credit Score Requirements: All types history are considered
- Loan Application Process: as little as 2 days
- Length of time of Repayment: 1-5 years, Short term loans and long term loans are available
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Business Line of Credit
A business line of credit offers a flexible financing option. A business line of credit resembles the same basic structure as credit cards, which makes it easy to understand and quick to start. The lender offers access to an agreed-upon amount of cash with a certain credit limit, and you’re able to draw from that cash whenever your operation needs it most. The best part? You only pay on what you draw, which means that you have access to the cash you need when you need it.
With lower interest rates and closing costs than traditional loans, a business line of credit is popular for its renewability and flexibility. Lines of credit are ideal for seasonal expenses, emergency situations, payroll, operating needs, and more.
- Quick and easy approval
- Poor to excellent scored considered for lines of credit
- Great revolving option with flexibility
- Repayment terms over 12 months
- A simple and convenient application process for lines of credit
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Business Lines of Credit
U. S. Small Business Administration (SBA )Loans
The U.S. Small Business Administration offers help to entrepreneurs that need funding in order to get started, build, or grow an existing one with success. Contrary to common belief, the Small Business Administration is not actually the lender, but rather a governing agency that offers loan program guarantees. If you’re looking for a super low-interest rate paired with a long-term funding solution, an SBA loan may be for you. If your business plan is looking toward the future, an SBA loan can be a sound choice. However, it’s important to note that SBA loans are not easy to qualify for. They require time, energy, documentation, and commitment — along with great history. You’ll also need to have a business plan in writing. If you’re without one, the SBA has great resources and business plan guides to help.
While the application process can be tedious, getting approved for lending from the SBA has its upsides. We can help you choose the right SBA loans and navigate through the process of the SBA.
- Great terms and low-interest rates
- Requires excellent credit history
- Ideal long-term loan solution
- Terms depend on SBA loan program
- Difficult application process
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Business Credit Card
Another great option for financing a business is a business credit card. These credit cards are issued with an open revolving line that charges principal & interest with a credit limit. Once the card is issued, it can be used for purchases or to make payments for your business. This business credit is a great business financing option to have alongside other loans for a small business, offering incredible flexibility and utility for a wide range of purchases and expenses.
If you’re in ownership, having business credit cards is fairly essential. It can be used for so many purposes and can be a great way to build your credit score and give you something to fall back on.
- Instant approval
- Open revolving line of credit with a credit term
- Must have good to excellent credit (with deep history)
- Ideal for business owners nationwide
- Documentation requirements vary by credit limits
- A simple and easy application process
Business Cash Advance
Businesses that receive a good portion of their revenue from credit or debit card sales often times have highs and lows when it comes to profitability. For these companies, funding options are crucial. A business cash advance, also known as a purchase of future sales agreement, advances future sales at a discount. Basically, the advance is paid back by taking a fixed percentage of future overall sales deposits.
Small businesses that are struggling to get funding from banks or other financing institutions oftentimes find themselves wondering where to turn, that’s where a cash advance can help.
- Lightning-fast approval
- Cash for business owners with low credit
- No term limits
- Reasonable, competitive terms
- Simple application process
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Business Cash Advances
Merchant Cash Advance
A Merchant Cash Advance is a way to raise money by leveraging your monthly cash flow. This works for those who are looking to avoid providing financials, have a credit impairment, or show low balances in their business bank account.
What is unique about merchant cash advance is the fact that the repayment is made by a set fixed percentage of future sales, therefore having a flexible repayment period with no term limit. This is not a loan, but an advance. The business owner sells a portion of the business’s future sales at a discount to a funder in exchange for cash today. Repayments are made either by credit card percentage splits at the time of the transaction or fixed daily Monday – Friday ACH payments.
- Funding Amounts: $10,000 to $1,000,000
- Credit Requirements: All types considered
- Application Process: as little as 1 day
- Length of time of Repayment: Flexible
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Merchant Cash Advances
Equipment financing is when you use the equipment you are purchasing as collateral to acquire the financing. Due to this fact, terms can go longer than traditional financing, up to 5 to 7 years. Equipment financing relies on business owner credit and the collateral for decisions.
- Loan Amount Limits: $10,000 to $1,000,000
- Credit Score Requirements: All types considered
- Application Process: Same day to 24 hours
- Length of time of Repayment: 1 – 5 years
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Invoice financing advances the outstanding balance to increase the speed of cash flow. This solution provides money quickly, and there is no need to wait for outstanding invoices to be collected and received by the client with invoice financing in place. Invoice financing has affordable costs ranging from 1% to 2.5% fee off of the face value of the invoice advanced.
Interest Rates: None
Repayment Terms: Not a traditional loan
Fees: 1% to 3% fee based on the invoice. Monthly Service fees may apply depending on the volume of invoices factored
Borrower Credit Requirements: The score of the business owner does not matter
Application Process: A couple of days for approval and set up
These aren’t your only options when it comes to business financing. There’s a wide range of small business financing options, for both small businesses and beyond, that you can take advantage of for working capital, growth, infrastructure, start-up venture funds and more. For example:
- Traditional Bank Loan-Traditional lenders such as a bank provide a loan.
- Short Term Loans
- Debt Financing-Debt financing occurs when a firm raises money for working capital or expenditures by selling debt instruments to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid. These are some of the most common types of lenders out there.
- Equity Financing-Equity financing is the process of raising funds through the sale of shares. Companies raise money because they might have a short-term need to pay bills or they might have a long-term goal and require funds through equity financing to invest in their growth.
- Angel Investors-An angel investor (also known as a private investor, seed investor, or angel funder) is a high-net-worth individual or lender who provides financial backing (investment capital) for small startups or entrepreneurs, typically in exchange for ownership equity in the company. Often, angel investors are found among an entrepreneur’s family and friends. Angel investors are compensated by the percentage of equity they have in the venture/investment.
- Venture Capitalists / Venture Capital Funding-Venture capital firms offer a form of private equity and a type of financing that investors invest in startup companies and small businesses that are believed to have long-term growth potential. These lenders generally comes from well-off investors, banks and any other financial institutions. These firms provide funds startup loans, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth, and need this to succeed. Venture capitalists make their money by charging management fees and on carried interest.
- Accounts Receivable Financing
- Real Estate Loans
- Friends and Family-More often than you think, small business owners turn to family and friends to help finance their operation. Friends and family have been helping out since the dawn of time providing funds.
- And more small business financing options…
Why Do You Need Small Business Financing?
Understanding why you need a small business loan or other business financing solution can help guide your choices when it comes to particular funding products. What is your priority for getting business funding?
Working capital is perhaps the most popular springboard for financing business. Why? Because it applies to a wide range of cash flow problems. Keeping up with daily operational costs is a must.
Whether it’s to get more inventory, a new venture, acquiring essential employees, research, or development and more — having business financing options available can play a big role in the growth of your business — even with a real estate purchase.
For some industries, equipment is the workforce that guarantees its success. The issue is that equipment can be an extremely costly expense. Having equipment loans and lease options is a must for businesses that rely on equipment for their everyday operations.
Infrastructure | Invest in the Business
Moving to a new location or opening up an additional location requires a ton of funds. For businesses looking to expand and make invest in growth, funding options offer peace of mind when it’s time to scale up.
It’s also important to factor out how much you need for your operation. It’s all about projecting future needs and determining the amount that makes sense for you.
By applying a business loan affordability test, you can evaluate your business’s financial situation — helping you calculate where you sit. A monthly profit and loss assessment can illuminate how much you can actually afford in a monthly loan payment. Furthermore, your business’s monthly revenue can be calculated through business bank statements — just keep an eye out for monthly deposits. Finally, take a look at your monthly expenses, put it all together, and you can get your net profit.
Finally, you can start to piece together your budget. You need to know what you’re able to afford in order to choose the right small business loan product. By evaluating trends over months (not just one month), you can see if sales are declining or increasing. Understanding what you can handle will get you far when weighing out your financing options.
How to Qualify for a Small Business Loan
There are a few factors involved in your approval.
1. Credit Worthiness: Credit Score
How does your personal credit and credit report as a business owner affect qualifying for small business financing?
Personal credit score information of the business owner plays a significant role in determining what, if any, loans you can be approved for by lender loan applications. As a business owner, the better your personal credit is, the more business funding options you will have to choose from. However, it’s essential to know that not all financing offers involve a personal credit check.
How to Understand, Review, and Analyze your Credit
A smart thing to do is pull your own credit information using all three credit bureaus to see your credit scores: Equifax, Experian, and TransUnion. (Be wary of sites that offer you “a credit score” as that may be another credit risk model other than FICO.)
FICO credit score risk model:
What is a good credit score to get approved during a business loan process?
As a rule of thumb, a 750 FICO score and up is Excellent, 720 FICO and higher is good, 680 FICO and higher is Fair, below 680 to 620 FICO is marginal, and below 620 is considered poor. For the most part, the longer the term and the lower cost small business loans will require the highest credit scores and standards.
2. Length of Time
How long you have been in business is a significant factor in determining qualifications and repayment guidelines for loan products. Let’s face it; business lending is a risky business. Business lenders need to see a track record to take a calculated risk in providing you a term loan. Many small businesses don’t make it past the first year in business, so obviously, business lenders will be cautious if you have less than two years in business when providing loans.
3. Financial Statements
What financial documents and information will business lenders need for small company loans?
Business Bank Statements
Almost all small loans will require bank statements to review. Typically three months are needed, but sometimes 6 to 12 months may be necessary if the business is seasonal or has made a considerable loan amount request. Bank statements show business lenders the cash flow activity of the company and your ability, as the business owner, to manage the business’s finances.
Profit & Loss and Balance Statements
These statements provide a more detailed view of the business and its health and may be required for the longer-term and lower-cost term loan options. The good news is that Profit & Loss and Balance Sheet statements typically are not necessary for alternative business lending products.
Business and Personal Tax Return
Some business lenders will need to see tax returns. If that is going to be a challenge, there are a lot of alternative business online lenders who will not require these documents, but keep in mind, most likely, the term loan offers you receive will be impacted by the lack of documentation and therefore be reflected in the costs and repayment guidelines you will be provided.
How to Qualify for Business Financing
There are some essential components that everyone who owns a business should be aware of when it comes to qualifying for business financing. New owners and seasoned entrepreneurs alike can benefit from understanding what goes into qualifying for small business loan opportunities.
CreditPersonal and business credit scores play a substantial role in determining which loans you may qualify for. Obviously, the better your personal history is — the better off you will be. However, there are still options available for those with less than stellar credit. If you’re wondering about your history, take advantage of all three credit bureaus: Equifax, Experian, and TransUnion. Your FICO score is determined by different aspects of data, but it can be understood fairly easily with five main areas.
- Payment history
- Amounts owed
- Length of credit history (in years)
- New credit
- Credit mix
- 720 or higher is considered good.
- 680 or higher is considered fair.
- Between 680 – 620 is marginal
- Below 620 is considered poor
Length of TimeTime in business also plays a role in determining whether or not your small business may qualify for small business financing. It can also affect the terms for specific loan products. Business lenders need assurance that companies have a track record to calculate risks associated with the loan or advance. Since many businesses fail to make it past the first year in business, lenders are wary to assist with funds, especially if you have less than two years in business. However, AdvancePoint Capital believes in empowering small businesses, which is why we have less stringent requirements for time in business. While terms and costs may be higher than traditional loan institutions for certain loan amounts and products from alternative financing providers, for some businesses, it’s a sound option to get the cash you need — when you need it.
Financial StatementsIn order for you to get certain loan products, a business lender will need financial documents to evaluate. How critically a lender evaluates these financial statements depends on what type of small business financing solution you’re trying to qualify for, however, there are three basic documents you should have ready.
Business Bank StatementsNearly all small business loans require bank statements. Though the amount may vary, 3 months’ of company bank statements are usually required. For some, it could be between six to twelve month’s worth. This is typically true for seasonal businesses or those that have made a significant loan request. Bank statements illustrate cash activity and the state of a business’s finances.
Profit & Loss + Balance StatementsThese documents offer a clearer window into the state of operations and may be required in order to qualify for longer terms and lower-cost business financing opportunities. However, alternative business lending options do not typically require these statements.
Business and Personal Tax ReturnNow, some business lenders may ask to see tax returns. This is especially true for traditional financing institutions like banks. However, many alternative online business lenders do not require these documents. It’s important to note that having these on-hand can greatly expand your options — leading to a diverse lineup of financing choices for you.
How Do I Get Financing For a Small Business? We Can Help.
Small businesses nationwide are constantly on the hunt for a funding option that fits their company needs. If your small business needs funding, AdvancePoint Capital offers a wide range of financing opportunities to suit your needs. Whether you’re dealing with poor history, limited time in business, or lack of proper documentation — we can help you get the cash flow you need for your company. No matter the type of financing you’re looking for, we can help guide you.
Traditional bank loans and lenders can be a nightmare to qualify for, that’s where online lenders like AdvancePoint Capital can help you find what you are looking for and guide you. We provide finance options for your company, whether it’s by using outstanding invoices or future sales as collateral — or through avenues that are similar to credit cards, we can find flexible and affordable options for your small business today. Both new businesses and established ones need funds, and as your designated lender, offer a diverse lineup of loan products that can get you off your feet or to the next level.
Frequently Asked Questions
What are the three main types of financing that meet my business needs? What business loan options are there for my company?
The three main types of business financing people utilize are Business Term Loan, Line of Credit, and some other alternative financing options that have a unique structure.
This is entirely based on the loans you qualify for and what your overall goals are. The best place to start is by identifying lenders that align with your objectives. Bank lenders may have more appealing options, but you may not qualify due to limited time in operation or your business credit score. Luckily, there are plenty of ways to find the one that works for you. Online lenders offer new routes and ways to obtain the funding you need, with a wide range of loans for people and operations of all shapes and sizes. Additionally, SBA options can also provide attractive options. However, qualifying for one of the many SBA loan options can be difficult.
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