How to Get a Business Loan With Excellent Credit?
If you’re one of the diligent and prepared business owners with excellent credit, the options for small business financing are abundant. Whether you’re looking for term loans, advances, Small Business Administration (SBA) opportunities, and beyond — your credit score will have a significant impact on loan options, the interest rate, and overall freedom for growing your business. Here at AdvancePoint Capital, we make acquiring funding 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.
While having excellent scores can certainly make dealing with banks and traditional lenders, they still make business owners jump through countless hoops and slow down access to instant cash flow. AdvancePoint Capital speeds up the process. Running a small business requires an incredible amount of initiative, bravery, and support. We’re here to offer that support by providing a wide range of financing opportunities to help with expansion, renovations, equipment purchases, working capital, and more. 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 and determine both a business and personal credit score for business owners. The FICO score is a universally known measure of personal creditworthiness and ranges between 300-850. Business credit scores, on the other hand, typically range between zero to 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 for 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 as significant of a role with certain financing products like merchant cash advances or short-term business loans — an excellent personal credit score can open up doors for a wide range of attractive funding options, including interest rates.
Check out this chart of how your personal credit score can impact business funding opportunities.
The 3 Best Options For Excellent Credit Business Loans
Long-Term Business Loans
A long-term business loan is an incredibly desirable financing opportunity due to its extended repayment period (2 to 7 years). Long-term loans offer a lump sum upfront with principal and an interest rate starting from 4% with monthly payments. For those with excellent credit, a long-term loan option offers both extended repayment and larger loan amounts.
- Low rates starting from 4%
- Longer terms
- Accommodates a larger loan amount
- Monthly payments
A wide range of industries live and die by their equipment. As technologies progress, demand grows, and safety requirements change — purchasing new equipment is a necessity. However, rarely do businesses have cash on hand that can accommodate these significant purchases. Through equipment loans, you’re able to use the equipment as collateral for instant access to cash flow. This option is reserved for those with an excellent personal credit history and business financial health.
Benefits of Equipment Financing:
- Simple 1-page application
- Limited financial paperwork
- Repayment terms from 1 to 5 years
- Monthly payment options
The Small Business Administration, also known as the SBA, helps business owners and entrepreneurs succeed and grow. While the SBA is not a lender, they are a government program that helps through loan program guarantees of up to 85% of the amount approved through their lender network. Some of these lenders even have revolving lines of credit for up to 10 years. With low-interest rates and long-terms, the credit requirements for these programs are incredibly high. The SBA offers a wide range of financing opportunities, but there are three popular options that stand out.
7(a) Loan Program
For most small business owners, the 7(a) loan program is often their first go-around. It’s a general-purpose loan for small businesses that offers incredible flexibility in how it can be used for the company. The SBA caps the maximum interest rate that small business lenders can offer, limiting the damage to business owners. Additionally, these rates can be affected by your qualifications, including your FICO credit score and business credit score. Perfect for working capital, renovations, real estate purchases, and more. Typical repayment periods of 7-25 years (with real estate being on the longer end of the spectrum).
SBA Microloan Program
For businesses with incredibly high overhead or startup costs, the SBA microloan program is an optimal solution. Banks and traditional business lenders aren’t always interested in helping out with smaller amounts of capital (less than $50,000). However, you don’t always need long-term funding or that particular extended type of loan. That’s where the SBA can help. Remember how we said that the SBA is not the lender? Well, this is an exception. The SBA microloan program is a great way to get cash flow for marketing, advertising, restocking, payroll, and other smaller expenses — not for purchasing real estate. Compared with other SBA loan programs, fair to good credit is accepted.
SBA CDC/504 Loan Program
On the other side of the spectrum is the CDC/504 loan program, which offers significant funds for business expansion or long-term funding needs. At its foundations, the CDC/504 is essentially two separate loans. The lender finances around half of the cost, while the remaining capital comes in the form of a down payment from the borrower. The CDC portion is subjected to SBA loan risk guidelines, while the amount from the lender is not. This type of financing option is typically for those seeking commercial real estate, equipment purchases, or costly renovations.
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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.
Your 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 daily average balance, and any cash reserves left in your business bank account. Use this information to not only make decisions about how much you need but also 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 — and both play their role. Business revenue doesn’t always paint the most vivid picture of a company’s overall health. In order to qualify for small business financing for excellent credit, you’ll need to have sound profits. If you’re struggling in this department, there are other options that provide flexible financings such as 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 business, it’s important 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 type of financing can best suit your business, whether it be a line of credit, term loans, SBA loans, and beyond.
Advice, Tips, Warnings About Excellent Credit Business Funding
Having excellent credit can feel like your options are limitless. While you certainly have more choices than those barely scraping the minimum credit score requirements, you can still run into issues 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?
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.
The fast, convenient, and straightforward way to get the money you need for your business – now!
Make sure to Get your Quote Today by filling out our simple form.