Business Loans

How To Find the Best Business Loan

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Choosing The Best Small Business Financing Options

Choosing The Best
Small Business Financing Options

Small business owners searching for information related to small business loans must ask themselves first which business loan options are best for their business investment. Is it a term loan? A line of credit? Financing for quick access to cash?

The search for small business funding is not the same as looking for personal loans. The purpose of what you are using the money for your business can dictate what business loan products you will choose. Similarly, the loans or small business funding you need for business renovations might not be the same one you’d get if you were experiencing a short-term cash flow problem and needed a working capital loan for managing cash flow.

Where do companies get the necessary information to make solid financing decisions when it comes to business loans? What loan options are available? While traditional routes such as bank loans are often difficult for the average small business owner to get approved for loans, you still have many other financing loan options in the marketplace.

AdvancePoint Capital has a variety of small business funding options for business owners, including SBA loans, in our alternative lender’s network, to help growing businesses and fulfill business needs. We have competitive rates and terms, have a variety of business funding options and can help you choose the right small business loan for your business to access. Let AdvancePoint Capital help you choose the right loan for your business!

Small business owners searching for information related to small business loans must ask themselves first which business loan options are best for their business investment. Is it a term loan? A line of credit? Financing for quick access to cash?

The search for small business funding is not the same as looking for personal loans. The purpose of what you are using the money for your business can dictate what business loan products you will choose. Similarly, the loans or small business funding you need for business renovations might not be the same one you’d get if you were experiencing a short-term cash flow problem and needed a working capital loan for managing cash flow.

Where do companies get the necessary information to make solid financing decisions when it comes to business loans? What loan options are available? While traditional routes such as bank loans are often difficult for the average small business owner to get approved for loans, you still have many other financing loan options in the marketplace.

AdvancePoint Capital has a variety of small business funding options for business owners, including SBA loans, in our alternative lender’s network, to help growing businesses and fulfill business needs. We have competitive rates and terms, have a variety of business funding options and can help you choose the right small business loan for your business to access. Let AdvancePoint Capital help you choose the right loan for your business!

advancepoint capital get started today

Get Started Today

AdvancePoint Capital makes the loan application process a simple, straightforward experience.

The Following Are The

Most Common Types Of Small Business Financing Options For Small Business Owners:

Small Business Loan

Small Business Loan

Business Line of Credit

Business Line of Credit

SBA Loan

SBA Business Loans

Equipment Financing for a California Small Business

Equipment Financing

Merchant Cash Advance for a California Small Business

Merchant Cash Advance

Invoice Financing

Invoice Financing

Small Business Cash Advance for a California Small Business

Business Cash Advance

Short-Term Business Loan for a California Small Business icon

Short-Term Business Loan

The Fast, Convenient, And
Straightforward Way

To Get The Financing Solution You Need For Your Business – Now!

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Identify Why You
Need Small Business Loans

The first step in any search process for the right financial products is clearly defining why your small business needs the funds. The “why” will direct you many times to the right loans. Working capital is the most popular reason for business owners because there are so many ways it can be used. When cash gets tight due to fluctuations in sales, extra capital can provide the buffer needed to carry the business through rough times. Other reasons for the need for business financing include, but are not limited to:

Working Capital Loans-Unexpected Expenses

Sometimes cash flow can get tight, and a working capital loan is needed to maintain proper levels of money to operate the business and maintain control of cash flow.

Business Needs

A new venture that requires a down payment, upfront capital, recruiting key employees, initiating a new business relationship, or research and development for growing businesses and their business needs.

Purchase Inventory

A common need for eCommerce, manufacturers and other retailers dictates how a business operates.

Marketing/Advertising

Small business owners need funds to promote their business. A variety of advertising strategies include internet marketing, direct mail, radio advertising, flyers, and paper ads, to name a few.

Equipment

Most businesses have some type of equipment that is essential to the way the business operates. Perhaps you’re a business that requires machinery, furniture, medical equipment, construction equipment, computers, or tools. These are common requests from restaurants, auto repair shops, construction industries, medical practices, and manufacturers.

Infrastructure Improvements/Business
Expansion Loan

This category could include a move to a more prominent location or office that requires a business expansion loan due to the size of capital required.

Information Technology and Software

In today’s world, capital may be needed for business needs related to website development and site maintenance, customer relations management software, computers, machines, and other products essential for a business’s success.

Consolidate Debt

When debt payments can be overwhelming debt consolidation loans can be a great solution to improve cash flow.

How Do I
Qualify For a Small Business Loan?

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There are a few factors involved in your approval.

Creditworthiness: Credit Score

How does your personal credit and credit report affect qualifying for small business loans?

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 and the easier it will be to qualify. 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). As a rule of thumb, a personal credit score of 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 to qualify.

Length of Time in Business

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 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.

business loan capital

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 in order to qualify. Typically three months are needed, but sometimes 6 to 12 months may be necessary if the business is seasonal. Bank statements show business lenders how much revenue the business has, 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 Break

Down Small Business Loan
Programs/Offers/Terms

Interest Rate of Factor Cost of a small business loan

There are two most common types of small business loan rates out there when shopping for a loan. Some small business loans charge a rate as a consumer lending, but others charge a “factor rate” or “factor cost,” which is a flat cost and not principal and interest.

Interest rates are charged based on the daily principle, whereas factor rates are flat costs.

This means business owners pay the same total cost whether you pay off early or not unless they offer an early pay discount or penalty. But rate or factor cost does not tell the whole story. Most lenders charge additional fees, so you have to count those in overall cost when comparing.

Terms of Small Business Loans

The length of the repayment term for loan products varies greatly and can be from 6 months to 7 years, depending on the product and qualifications. Although one loan may seem cheaper than another, you must factor in the length of time of repayment.

You may want to consider a more affordable payment with longer-term versus short-term loans if you are willing to pay more in rate and/or cost for that benefit. If the options are loans, then check for the APR (Annual Percentage Rate), which factors not only rate and cost but also the length of repayment and payment frequency.

Installments and Method of Repayment of a small business loan

Disbursements can be monthly, biweekly, weekly, and even daily (weekdays), depending on the business funding product. It is very common for collection to be in the form of an auto deduction from your bank account via an ACH. Although payment frequency can be a factor if you have very low average daily balances in your business bank account, the interest rates, costs, and term should be a more significant consideration than that of payment frequency.

Origination Fees

This is a charge for services at the time of consummation of the loan. The fee is often a percentage of the amount borrowed or advanced, typically ranging from 0% to 5%.

What Is The Difference Between
Secured Loans and Unsecured Loans?

The main difference between secured loans and unsecured loans is that a secured loan requires collateral. On the other hand, an unsecured loan does not require collateral to back up the debt.

You can get a secured or unsecured personal loan from most lenders, including banks, credit unions, and online lenders. As long as you have a high score with the credit bureaus and have made wise financial decisions in the past, you should be able to qualify with most loan providers.

When evaluating an application, a lender considers your history, previous debt payments, and current finances, including your savings account — this is true whether you’re applying for a secured or unsecured loan.

But with secured financing, you offer a personal asset, which you risk losing if you default on the loan. Collateral provided for a secured personal loan could include real estate, vehicles, or other valuables you own.

Here are other differences between secured and unsecured debt you should know about.

Amounts and Reasons for Borrowing Money
1

Amounts and Reasons for Borrowing Money

There are different reasons a borrower would apply for a secured and unsecured loan. Generally, secured loans are for larger amounts of money. Because they’re backed by an asset, you can borrow more money without paying a higher rate.

With unsecured loans, the charged interest rate is higher. So using an unsecured loan to borrow a lot of money could mean that you end up paying a much higher amount of interest. However, they’re quite common and you likely already have these types of loans as a consumer.

Credit card debt, student loans, and some personal loans are unsecured. You might take out an unsecured loan from a financial institution to cover unexpected business expenses or to access cash to solve a short-term issue.

Borrowers tend to choose secured personal loans for higher amounts of money. Common examples are mortgages or home equity loans. If you’re looking to purchase a car, the lender retains the title of the vehicle until you pay it off, so an auto loan is a type of secured debt as well.

risk levels
2

Risk Levels

Secured and unsecured loans: what’s the difference in risk levels? A secured personal loan carries a higher risk because of the collateral. If you default on a secured loan, you could lose your collateral. The default will also show up on your credit report.

Unsecured personal loans are different. If you default on them, it will affect your credit score, but you won’t lose other assets. As such, they are considered to have less risk for the borrower.

intrest rate level
3

Interest Rate Levels

Although secured loans are riskier for you, lenders have more confidence in them. They come with collateral backing so a bank will offer lower interest rates and lower average APR.

On the other hand, a bank, credit union, or online lender can take your collateral if you cannot make your monthly payments — that’s why they don’t have to take on as much risk.

Unsecured loans work differently. They have higher interest rates because the bank will lose money if you cannot pay your monthly installments.

payment terms
4

Repayment Terms

When assessing secured vs. unsecured loans, you should consider the repayment term. Because a secured loan amount is larger and has a lower interest rate, it might have a longer repayment time. You might repay your loan over five, 10, or even 30 years.

With an unsecured personal loan, you generally would take out a smaller amount and pay it back in less time. Because it’s riskier for the lender, unsecured loans don’t usually have long repayment times.

lower credit score
5

You Can Get a Secured Loan with a Lower Credit Score

If you want to borrow money, you also have to consider whether you have bad credit or excellent credit. With a poor credit history, you’ll have an easier time getting a secured loan. That’s because the collateral helps to offset the risk the lender takes on when lending to someone with poor credit.

Either way, plan to save money and prioritize repaying your debt on time — whether it’s a secured loan or unsecured. This will improve your credit score and you’ll have an easier time qualifying for the financial products you need in the future.

How to Choose the Best Small Business Loan

Small Business Loan get quote

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AdvancePoint Capital makes the loan application process a simple, straightforward experience.

Frequently Asked Questions

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