How to Get a Business Loan With Excellent Credit?
If you’re one of those diligent and prepared business owners with excellent credit, the options for small business financing are abundant. Whether you’re looking for business loans, a business line of credit, SBA loans, or something beyond, your credit score can significantly impact your loan options, interest rate, and overall freedom for growing your business.
Here at AdvancePoint Capital, we make acquiring business loans for your business fast and convenient. You’ll get to enjoy all of the benefits of working with an alternative lender while gaining access to the best business loans available in the marketplace.
While having excellent credit scores can undoubtedly make dealing with banks and traditional lenders less difficult, these lending outlets still make business owners jump through countless hoops, slowing down access to capital. Banks will want to see that you own a successful, established business before offering any capital, and your time in business will be a major factor.
AdvancePoint Capital speeds up the process of getting the money your business needs. Running a small business requires an incredible amount of initiative, bravery, ingenuity, and support. We’re here to offer that support by providing a wide range of financing opportunities from our network of online lenders to help with expansion, renovations, equipment purchases, working capital, and more. When you have the credit to grow, we’re here to give you the tools and resources you need to expand operations and catapult your business to the next level.
How Your Credit Score Impacts Small Business Loans
Credit bureaus run calculations to determine a business and personal credit score for small business owners. The FICO score is a universally understood measure of individual creditworthiness, ranging between 300-850. On the other hand, business credit scores typically fall between zero and 100.
It should come as no surprise that the higher your score, the more attractive your business will look to a lender. Lenders will evaluate both your business and personal credit score to determine whether or not you’re a solid candidate for loans or financing.
Both traditional lenders and alternative lenders like AdvancePoint Capital will closely evaluate the personal credit score of a business owner. While it won’t play a significant role in certain financing products like merchant cash advances or short-term business loans, an excellent personal credit score can open doors for a wide range of attractive funding options with great rates.
The Best Small Business Loan Options for Excellent Credit
Emergency Line of Credit
A line of credit operates similarly to that of a credit card in that you can draw money off the line at any time. You are charged a principal & interest rate, which is cheaper than other loan products and credit cards. The business line of credit does have a maximum limit based on your approval. More extensive documentation is required, and approval is more difficult, but the credit limits are much larger than credit cards. A business line of credit is accessible from some banks and online lenders.
Credit Limits: $10,000 up to $1 million plus
Rates: Rates start at prime plus 1% (as of 2020, around 6%)
Payments: Weekly, bi-weekly, and monthly payments available
Fees: Application fee starting at $250
Credit Standards: Good credit score to excellent credit required
Benefits and Best Uses
Flexibility is the number one reason small business owners love business lines of credit. You can draw cash at any time up to your credit limit and only pay interest based on your current balance. The rates and fees are also low compared to other asset-based loans and loan products.
Small Business Administration (SBA) Loans
The SBA is a government agency that provides information, resources, programs, guidelines, and business loan guarantees to approved SBA lenders, allowing them to issue business loans for small businesses.
The SBA has a stringent lender approval process to ensure small businesses a quality borrowing experience. The SBA’s mission is to help American enterprises to start, build, and grow their business successfully, but it is not a lender. The SBA provides a guarantee that approved SBA lenders can take on the risk of funding and make their decisions under specific terms that keep their money safe.
SBA Loan Programs & Information for Small Businesses
SBA approved lenders are authorized to provide the following listed below:
- SBA Standard 7(a) Business Loans
- SBA 504C Loan
- SBA Express Business loans
- SBA EIDL Business loans
- SBA Paycheck Protection Program (PPP) Business loans (CLOSED)
- SBA Export Express Business Loans
- SBA Export Working Capital Loans
- SBA International Trade Business Loans
- SBA Veterans Advantage Business Loans
- SBA CAP Credit Line
Standard SBA 7(a) Loan Program – The SBA’s leading small business loan program provides financial assistance to small businesses. The primary use is for working capital for small businesses.
SBA 504 C Loan – The SBA CDC/504 provides long-term, fixed-rate financing of up to $5 million for significant fixed assets that promote business growth and job creation. This loan is available through Certified Development Companies (CDCs), the SBA’s community-based partner regulating nonprofits and encouraging economic development within communities. CDCs are certified and regulated by the agency to provide SBA loans to small businesses.
An SBA 504 loan can be used for a range of real estate assets that promote business growth and job creation. These loans include down payments for the purchase of real estate or construction-related needs, the improvement or modernization of property, land purchases, or updates to streets, utilities, parking lots, and landscaping for existing facilities.
SBA 504 business loans cannot be used for:
- Infrastructure expansion
- Consolidating, repaying, or refinancing debt
SBA Economic Injury Disaster (EIDL) – In response to the Coronavirus pandemic (COVID-19), small business owners, including agricultural businesses and nonprofit organizations in all U.S. states, Washington DC, and territories, can apply for the EIDL. The EIDL is designed to provide economic relief to small businesses currently experiencing a temporary loss of revenue due to COVID-19.
SBA Paycheck Protection Program (PPP) – The SBA has established PPP business loans in response to COVID-19. An SBA PPP loan provides financing resources to small businesses affected by the Coronavirus pandemic that need financial help. Under the right conditions, this SBA loan offers forgiveness. These business loans were designed for small business owners across the U.S. to retain employees and protect jobs during the Coronavirus pandemic. No new PPP loan applications are being accepted at this time.
Long-Term Small Business Loan (Traditional Loans)
A long-term small business loan is an incredibly desirable financing opportunity due to the extended repayment period of 2 to 7 years for a business term loan. Long-term loans offer a lump sum upfront with principal and an interest rate starting from 4% with monthly payments.
A long-term loan option offers both extended repayment and more substantial loan amounts for those with excellent credit. Long-term business loans are not considered unsecured business loans. Most lenders will want some form of security from the business.
- Low rates starting from 4%
- Longer terms
- Accommodates a larger loan amount
Business Credit Card
A business credit card functions the same as a personal credit card as it’s a revolving credit line with a plastic card issued for use when purchasing and making payments. Most businesses use credit cards in conjunction with other loan products to sustain cash flow demands.
Similar to personal loans, a simple one-page application usually conducted online or by phone is all that is typically required from lenders. There are cases that more documentation is needed and requested when looking to borrow more significant amounts of money. Small business credit cards are not unsecured business loans and require personal guarantees in most cases to obtain financing, just like personal loans.
Rates: Interest rates starting at introductory 0% up to 28.99% APR
Repayment Terms: Revolving line of credit with no term limits; Not a term loan
Fees: No origination fee
Payments: Flexible monthly payments
Credit Score Standards: Must have excellent to good credit
Documentation: No documents required; 1-page application (larger amount requests may require more documentation)
Invoice financing, also known as “accounts receivable financing” or “invoice factoring,” is a type of financing that allows small business owners to get cash quickly from unpaid invoices. Otherwise, depending on invoice terms, you may be waiting for 30, 60, or even 90 days to get that money from clients.
This type of financing allows you to get an advance of up to 95% percent of purchase orders or outstanding invoices from your customers. A finance company will advance a set amount of the unpaid invoice to the invoice owner and then collect directly from the client or customer for the unpaid portion. The credit approval is directed to the customer/client and not the small business owner, so there is little documentation required other than an application, Accounts receivable report, and contact information of the small businesses you invoice regularly.
Rates: Factor rates are 1.00% to 2.75% of the invoice amount
Fees: Monthly service fees which are based on the number of invoices
Credit Score Standards: No minimum credit score, but companies that are invoiced will be credit-checked; Credit report of business owner not needed or reviewed
Documentation: Minimal documentation; 1-page application, accounts receivable aging report, and client contact information list for all companies you want to advance invoices
The fast, convenient and straightforward way to get the business loans you need for your small business – now!
Get Your Quote Today by filling out our simple form.
How to Look For the Best Small Business Loans
There is a wide range of factors to consider when looking to obtain the very best small business loan possible from a financial institution.
Time in Business
Time in business and how established your small business is will be a big factor for most lenders as they want to see a track record they can evaluate.
Your small business revenue should help guide your business financing decision-making. Some factors to consider are the amount of revenue, how frequent your deposits are, the average daily balance, and any cash reserves left in your business bank account. Use this information to make decisions about how much you need and as supplemental information for loan underwriters. Alongside other qualifying factors, they will use business revenue to determine risk.
There’s a significant difference between revenue and profitability, but both still play their role. Business revenue doesn’t always paint the most vivid picture of a company’s overall health. To qualify for small business financing for excellent credit, you’ll need to have solid profits. If you’re struggling in this department, other options provide flexible financing, such as small business lines of credit or short-term loans.
Certain industries have an easier time obtaining small business loans, while others may have a more difficult journey ahead. When looking for financing options that fit your particular small business, it’s essential to know that your industry can play a role in qualifying factors.
Knowing just how much you need is crucial during the research and discovery phase. Using some of the factors we mentioned, like business revenue, profitability, and industry type, can certainly help. Calculating the amount you need will help determine what kind of financing can best suit your business, whether a line of credit, term loans, SBA small business loans, and beyond.
Frequently Asked Questions
Yes, the better the credit score, the more favorable terms will be for small business loans. The minimum personal credit score should always be above 720 for the best programs.
Your options, as well as costs and terms, will be negatively impacted with a 600 credit score.
Small business loans options are limited with 580 credit scores, but other options may be available from an online lender.
The SBA is not entirely driven by credit scores but does require at least a good, robust credit history.
Advice, Tips, and Warnings for Excellent Credit Small Business Funding
Having excellent credit can make it seem like your small business options are limitless. While you certainly have more choices than those barely scraping by the minimum credit score requirements, you can still run into issues with small business lenders if you don’t play it smart. Make sure to ask questions like:
- What does my cost vs. analysis look like?
- Can I profit from this financing opportunity?
- What long-term benefits can I expect?
- Are the costs, terms, and fees worth it?
- Do I need a lump sum vs. revolving line of credit?
- Can I use this capital for more than one use?
- Is a personal loan a better option?
Asking yourself these difficult questions can help prepare you for growing and expanding operations. AdvancePoint Capital is here to make your financing journey simple for those with good credit.
operations. AdvancePoint Capital is here to make your financing journey simple for those with good credit.
The fast, convenient, and straightforward way to get the money you need for your small business – now!
Make sure to get your quote today by filling out our simple form.