New Business Finance Guide: Looking Into SBA Microloan Programs, Lines of Credit, and More

Everybody knows you need money to start a business. The amount required and how it’s obtained varies considerably depending on the owner, type of business, industry, strategy, advertising plan, and so forth. If you’re one of the lucky ones, you won’t need much at all, or you already have more than enough to get start with already and won’t have to take out a loan or look around too much to obtain new business finance.

When looking for ways to get money for your business, there are two primary factors to keep in mind: debt and equity. Debt refers to the line of credit that provides you with the amount of money you need, which will have to be repair after a period of time.

Equity requires that you sell a part of your company, in which case you won’t have to pay back the investment because the “owner” of the equity you sold will get benefits, cash flow, voting rights, and basically a stake in the company. How much stake each investor gets varies depending on how much they put in and what was agreed upon.

Even if you do get approved for a new business finance loan, you might not get the full amount you applied for. The way to improve your chances is to make sure you have a high credit score and that you are able to present to the lender, in as much detail as possible, the amount you need, why you need it, and how you are going to spend each and every dime of it. Provide some proof that you will be financially stable enough to make payments.

Microloan Programs for New Business Finance

SBA Microloan Programs are worth looking into. These aren’t as well-known a some of the other SBA type of loans. They don’t provide the funding directly; rather they do it through an intermediary. In order to qualify, the intermediary might require you to get some kind of training. There is a big advantage to getting approved- not just because you’ll get some (if not all) of the money you’ll need, but because the training and assistance will help increase your chances of success.

There are also lines of credit to consider if you think your credit score is high enough that you’ll be approved for a new business finance credit card.

When it comes down to it, your best option is US Business Funding. Through here, you can get streamlined, fast loan processing, a high approval chance, flexible approvals for those who need new business finance but don’t have perfect credit.

Points to Analyse About A Business Loan

Businesses are now growing at a faster rate as compared to previous generations. And that’s where a business loan plays a crucial role in. In order for a business to keep operating, funding is something it requires of. It’s something that pulls them out of tedious situations and let the graph of their growth increasing at the same time. There are a few points that every business should analyse before taking a business loan.

The businesses have the idea about their needs and the amount required for their business. Sometimes, the businesses don’t have a clear vision why they need a loan or about the amount they need according to requirements. This a crucial decision that may decide the future of the business. In those cases, what a business need is advice. SMEs have been able to provide answers to such problems. The financial institutes are also providing advice to the businesses in order to fulfill their needs. Assessing their present scenario does also protect them from hideous situations.

Businesses are required to review their credit history before applying for a business loan as it’s something that every financial institutes reviews before giving any kind of fund. Have a look at your credit over previous times or have a credit report from different credit reporting agencies. If the business is a start-up, then have a look at your credit score. A credit score of about 700 is considered to be good and increases your chances of getting one.

After having a look at your credit ability every business should look at the options available to them. Sometimes the smaller financial institutes offer better options than that of a bigger one. Have a through review about the institutes and their financing procedures. You should have a talk with the loan officer and have a detailed idea about their terms and conditions. There are also different types of loans available such as micro finance etc. so have a view and select the best that suits your business.

Business plan is a crucial stage before having a loan. You must have a proper business plan. A business plan is something that a financial institute may view in addition to your credit ability. A proper business plan has detailed study of your past, evaluation of assets and project statements. It does also include an analysis of the market that your business serves and your growth over the years.

In order to have a security that, you will definitely get a business loan all you need to have is an appealing presentation. Fix an appointment with the loan officer and show them your presentation followed with a brief description. Do include your growth, market hold and assets in form of visual aids along with your application and required documents.

When To Use A Business Loan Packager

Lenders are extremely busy and are often put off by loan requests riddled with errors and/ or do not meet the basic standards of lending.

But small business borrowers with little knowledge of packaging loan requests can enhance their chances of getting funded through use of experienced loan packagers.

This is what Loan packagers do:

• Examine borrowing causes and clearly determine the borrowing need, thus eliminating vagueness and superfluous needs. Lenders are horrified by borrowers who request for loan amounts “out of the blues” based on nothing other than collateral value.

• Gather all the necessary documentation. Most borrowers are not aware of the loan documentation they need to provide to lenders. They spend weeks sending bits and pieces of information to lenders, thus agitating lenders and prolonging approval times.

• Analyze financial statements to ensure that the trends are right and all ratios make lending sense. If for example you revenues are declining, you must drill deep into the causes and mitigate them intelligently. Failure may lead to loan denial.

• Review Business and Finance Plans. Lenders have little or no time reviewing business and/ or financial plans that don’t make sense.

• Benchmark borrower business with industry peers. This helps in giving a lender the insights of the borrower’s industry and how the borrower is performing compared to the industry. If the borrower’s performance is not up to speed, then the borrower may want to undertake a business diagnosis test to identify the causes of poor performance.

• Match borrowing need with banks’ lending criteria. Banks have different lending policies based on loan amount, sector, purpose, collateral, years in business etc. Borrowers spend endless days shopping for lenders only to be denied having had several of their credit reports pulled.

• Provide insights on questions to expect from lenders. Fussy or lazy lenders will deny a loan on a flimsy excuse, such as, ‘the borrower does not maintain a budget’ or ‘the borrower is unaware of his average inventory carry’ etc.

• Advise on loan structure and terms including interest rates. Loan structure is key to getting favorable loan terms. You need to understand when to apply for a line of credit, a seasonal line, a short term loan or a long term loan. Various loans have different interest rates.

The support offered by Loan Packagers justifies the fees charged because borrowers,

• Close their loans faster

• Get very competitive rates

• Get to know their business finances better

• Reduce cost of loan-shopping

• Save on the opportunity cost of delayed or denied loans

• Minimize the number of credit reports that banks pull

The cost of loan packaging varies widely depending on the type of services provided and the complexity of the loan package.