What Is an LLC Loan?

An LLC (Limited Liability Company) is a structure whereby the owners are not personally liable for the company’s debts or liabilities. LLC’s combined the characteristics of a corporation, partnership, and sole proprietorship. An LLC does not pay taxes-their profits and losses are passed through to members, who claim them on their tax returns.

A Corporation Versus an LLC: What Are the Differences?

Entity Type Liability Taxation Maintenance
Limited Liability Company Combines limited liability protection with a pass-through tax structure. IRS rules allow LLCs to choose between being taxed as partnership or corporation. The easiest entity to maintain with the least amount of formal annual requirements.
Corporation Owners / shareholders have limited personal liability for business related debts. Separate taxable entity, corporate profits among owners and corporation. Meetings are required to maintain corporate status. Stock may be sold to raise capital.

Source: mycorporation.com

Advantages and Disadvantages of Getting a Business Loan as a Limited Liability Company (LLC)

There are no advantages or disadvantages to being a Limited Liability Company when it comes to getting business financing. AdvancePoint Capital is a Business Finance Marketplace that offers all available products regardless of your business formation. As with any business loan, it’s important to choose the best financing product for the job.

The 10 Best Business Financing Options for a Limited Liability Company (LLC)

There are a ton of great loan options when it comes to small businesses or LLC establishments. Business owners looking to take advantage of loan options that don’t come from traditional avenues like banks can utilize alternative lending solutions like online lending to find their solution. Finding loans online is a great way for a limited liability company like yours to obtain the financing you need to grow. Now, you can certainly use personal loans as an alternative if your credit isn’t looking solid, but then you’ll be dealing with combining personal assets with company ones. If you’re looking to separate personal assets or real estate from your business and leave yourself protected in the case of default, business loans are your best option.

Below are 10 of the best loan options and financing solutions for your limited liability company (LLC) to get started.

Long Term Business Loans for an LLC

Long term business loans are defined as loans with a length of time of repayment greater than two years. Long-Term Business Loans provide lump sum upfront, with a fixed term, and fixed monthly payment based on principal & interest. You cannot draw funds as you go and must determine your need upfront. The most popular use of funds for long-term business loans is expansion, general growth, finance long term purchase orders, or large long term projects.

Product Overview

Rates: Interest Rates starting at treasury index plus 1% to 2.5% 

Terms: 2 to 10 years

Fees: 0% to 3% Origination Fees

Payments: Monthly or Bi-Weekly payments

Credit Score Standards: Good to excellent credit preferred. All credit considered 

Processing Times: 3 days to a week

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Business Line of Credit for an LLC

A Business line of credit, is a lot like a personal credit card, in that it is an open revolving line of credit. The product allows the business owners to draw funds at will or make purchases up to a set credit limit. A business line of credit charges a principal & interest rate and requires either a renewal semi-annually or annually to be extended. Business lines of credit offer flexibility in accessing capital that many other business loans do not have.  

Product Overview

Rates: Interest Rates starting treasury index plus 1% to 2.5%

Terms: Open Revolving line of credit with no term limit. 

Fees: Origination Fees ranging from 0% to 3%

Payments: Monthly, Bi-Weekly or Weekly payments

Credit Score Standards: Good to Excellent credit preferred. All credit considered.

Processing Times: Same day up to a week

Small Business Administration (SBA) Loans for an LLC

The Small Business Administration (SBA) administers programs, guidelines, and loan guarantees to approved lenders to deliver business loans. The SBA is not a lender. They merely issue guarantees to those approved lenders to recover a certain percentage of the business loan if it were to default as long as they follow the guidelines and requirements set by the SBA. This guarantee provides protection and reduces risk. Without the guarantee, by the SBA the lender would not be comfortable with the attractive rates and terms that are offered. The credit and document requirements can be lengthy as well and it is difficult to meet requirements and get approved. Decisions take longer than most other business financing products, but if you can get approved, it’s worth it!

Product Overview

Rates: Interest Rates starting at Treasury index plus 1% to 2.5% 

Terms: 3 to 25 years 

Fees: 0% to 3% Origination Fees 

Payments: Fixed monthly payments 

Credit Score Standards: Good to excellent credit preferred. All credit considered. 

Processing Time: 1 week to up to a month depending on application volumes or other economic conditions.

Short Term Business Loans for an LLC

Short term business loans are a great alternative when you cannot get approved for more traditional financing products. A lump sum is provided upfront with a fixed period of time to repay, typically within 6 to 18 months. A “factor rate” or fixed cost of money is charged for most short term business loans. This product offers reduced documentation requirements and more lenient credit requirements traditional loans. Payments more frequent (bi-weekly, weekly, or in some case Mon-Fri) and terms are shorter to compensate for the higher risk that they are taking. The good news is short term business loans have higher approval rates than traditional lending options.

Product Overview

Rates: factor rates that range from 1.09% up to 1.45%

Terms: 6 to 18 months in duration (typically 12 months or less)

Fees: 0% to 5% Origination Fees

Payments: Weekly, Bi-Weekly and in some cases daily Monday-Friday

Credit Score Standards: All credit types considered, prefer above 550 credit scores 

Processing Times: Fast Funding; Same day to 24 hours

Equipment Financing for an LLC

Businesses that rely on equipment like the backbone of their business to operate often require equipment financing for the purchase of equipment because they don’t want to deplete cash flow. Equipment financing secures the equipment as collateral to reduce risk. Good to excellent credit is required because credit and the equipment are the only areas that are reviewed other than time in business and overall business assets. Limited paperwork is necessary to get approved. 

Product Overview

Rates: Factor Rates from 1.09% up to 1.45%

Terms: 2 to 7 year terms 

Fees: Origination Fees range from 0% to 3% 

Payments: Weekly or daily Monday-Friday Fixed ACH payments 

Credit Score Standards: Good to excellent credit preferred.

Time Frames: Same Day up to 3 days

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Business Cash Advance for an LLC

Business Cash Advances (BCA) is also known as the Purchase of Future Sales Agreement. The business owner receives an advance off of future sales and is responsible for paying back a fixed payback amount known as a specified amount which is greater than the amount that was advanced to the business. A “factor rate” is charged, which is the difference between the advance amount and payback amount and is a fixed cost. Factor rates do not function like principal & interest rates in that you are responsible for the payback fewer payments made if you pay off early. The BCA is repaid by taking a fixed percentage (specified percentage) of future overall sales deposits. The payments are collected by an ACH fixed daily or weekly payment deducted from a business bank account based on the specified percentage of future sales. Reconciliation can occur at the end of every month if the fixed payments exceed the month’s fixed set percentage of sales as described in the agreement. There is no term limit to a BCA.

Product Overview

Rates: Factor rates range from 1.09% up to 1.45%

Terms: No term limits. Repayment period dependent on future sales

Fees: Origination Fees 0% to 5% 

Payments: Weekly or daily Monday-Friday Fixed ACH payments 

Credit Score Standards: Poor to Excellent credit accepted.

Processing Time: Same Day to 48 hours

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Merchant Cash Advance for an LLC

Merchant Cash Advance (MCA), also known as a Purchase of Future Sales Agreement, like a BCA and is very similar but the biggest difference is the repayment process which is connected to the future credit card sales instead of overall sales. MCA’s take a set percentage of future credit card sales at the time of batch of credit cards until the advance is paid back in full. 

Product Overview

Rates: Factor rates ranging from 1.09% up to 1.45% 

Terms: No term limits (payoff depends on future credit card sales)

Fees: Origination Fees 0% to 3%

Payments: Set fixed Percentage of future credit card sales withdrawn at the time of batch of credit card sales

Credit Score Standards: All credit Considered

Processing Time: Same Day to 24 to 48 hours

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Invoice Financing for an LLC

Invoice financing advances money from issued invoices that the business owner has in accounts receivable, but not yet collected. With an invoice advance, there is no need to wait for outstanding invoices to be paid by the client. The Invoice finance company advances the money to the business owner in exchange for a fee taken off of the face value of the invoice advanced. The collection of the invoice is assumed by the invoice factoring company and relinquishes the responsibility of collecting on those invoices by the business owner.

Product Overview

Rates: None

Terms: No term limits 

Fees: 1% to 3% fee based on Invoice. Monthly Service fees depending on volume of invoices factored

Credit Score Standards: Credit of the Clients need to be favorable NOT the business owner advancing off invoices

Processing Times: Advances daily off of invoices created. 1 to 2 weeks to set up an Invoice financing relationship.

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Purchase Order Financing for an LLC

Purchase Order (PO) financing does not require any money out of the pocket of the business owner. It is a short-term finance option that provides the ability to raise capital to pay suppliers upfront for verified purchase orders. The advance frees up cash flow for the business owner that they would ordinarily need. This process can finance an entire order or a portion of it depending on the purchase order and scenario. At the time when a supplier is ready to ship the order, the supplier will request payment. The purchase order financing company advances the money to the supplier and then collects payment directly from the customer. The purchase order funder then will subtract their fees and then sends the balance of the invoice, so they act both as an “advance company” and a collection company for the business owner. 

Product Overview

Rates: None 

Terms: No term limits 

Fees: Each Purchase Order will cost between 1% to 5%

Credit Score Standards: All parties need favorable business credit history but all credit considered

Processing Times: Once relationships are set up for Purchase order financing, advances and collections can occur daily. It takes a few days to set up a purchase order financing relationship

Benefits and Best Uses of Purchase Order Financing

Purchase order financing is popular because it requires no money down and helps supplement cash flow in real-time without waiting for up to 90 days or more for invoices (depending on net terms) to be paid by clients for an affordable fee from a purchase order finance company.

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Business Credit Cards for an LLC

Business credit cards operate just like personal credit cards in that they are open lines of revolving credit that offer principal & interest rate with a set credit limit. A card is issued that can be used for making payments or purchases. It is not uncommon for business owners to utilize business credit cards as well as other financings as an overall toolbox of options approach to funding.

Product Overview

Rates: Introductory rates starting at introductory rates of 0% up to 28.99% 

Terms: Open revolving line of credit with a set credit limit 

Fees: Annual fees range from $0 to $500

Payments: Flexible monthly payments

Credit Score Standards: Must have good to excellent credit and deep credit history

Documentation: No Documentation for smaller amounts $3,000 up to $15,000. Larger credit limits may require documentation 

Processing Times: Instant approval to same day available

Benefits and Best Uses of Business Credit Cards 

This business financing product is an open evolving line of credit that has the ability to draw money, make payments, and make purchases using a card.

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What Types of Lenders Work With an LLC?

  • Traditional banks
  • Marketplace Business Originators
  • Online Business Lenders (Fintech)
  • Long-Term Business Lenders
  • Independent Sales Organizations (ISO’s)
  • Equipment Financing Companies
  • Invoice factoring Companies
  • The Small Business Administration (some products require collateral)
  • Private Lenders
  • Hard Money Business Lenders
  • Commercial Real Estate Lenders 

Frequently Asked Questions

Where do I find a Business Loan for an LLC?

It is not difficult to find or obtain a loan as an LLC. A simple internet search will reveal many types of business funding originators. Another option is any recent mail offerings that you may have received and saved. You may also find real estate lenders as a solution.

Should I pay any fees Up-front or separate outside of funding fees to a Business Loan Originator?

AdvancePoint Capital recommends you DO NOT need to pay for upfront fees to get most business loan products. Keep in mind, business funders and/or business lenders will charge fees that are deducted from proceeds at the time of funding. Always check the terms and conditions of all financing you are considering.

Can I qualify for a Business Loan as an LLC if I have bad credit?

The formation of your company will not impact your ability to get approved for funding if the business owner’s personal credit is considered bad credit. Be aware, the programs offer, rates, costs, and terms will be affected by your credit risk. Credit will play a big role in how much you’ll be able to get, along with terms and interest rates. So, if you’re thinking about purchasing real estate for example and your credit is less than stellar, you may have some trouble.

If I am a Start-up business, can I get a business loan if I am an LLC?

Your formation will not impact your ability to get a Start-up business loan. SBA loan offerings or Private business loan investors are the best options to secure a “Start-Up” business loan — even if you’re a limited liability company (LLC). You’ll also have some luck looking for a loan online, as online loan options have a lot more flexibility than others for small businesses like yours.

Advice, Tips, and Benefits About Business Loans for an LLC

It’s important to ask questions and do your research and homework about the business loan originator you are choosing as a limited liability company (LLC). What types of business financing products are offered? Are online loans or loan programs an option? Does the Business Loan Originator have the experience and knowledge to assist me in finding the best product for my needs? Does the business loan originator not only have great customer service on the origination of my loan but also on the processing, funding, and servicing of my loan on the back end? 

Always start by asking why do I need the money and how am I going to put it to good use for the business? Have I been given all business funding options in the marketplace? Am I getting competitive rates, costs, and terms for my situation and credit profile? Have I done my cost verse benefit analysis for borrowing money for the business?

Always check your proposals, term sheets, and agreements for terms and conditions which should include the cost of money, (interest rate or factor rate), all closing or funding fees, term duration, payment frequency, personal or business guarantees, and any collateral requirements.  

If you ask the tough questions of yourself and the business owner you will be better armed to make great decisions about products and terms offered.

How to Apply for a Business Loan for Your LLC Using Advancepoint Capital’s Business Funding Marketplace

Applying for a loan with AdvancePoint Capital is as simple as a 1, 2, 3, 4 process. Start with this online form, then fill out the short application page, wait a few hours for your approval, and then get your money!

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The fast, convenient, and straightforward way to get the money you need for your business – now!
Get your Quote Today by filling out our simple form.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.