Types of Lenders That Offer Small Business Loans and a Few Questions to Ask Yourself
Small business loans are nowadays available from numerous sources – the network of banks and lending institutions backed by the government’s Small Business Administration, as well as financial institutions that are not partnering with the SBA offer various great financial products to small business owners. If you own a small business and you think that taking out a loan is what you need to be able to grow, here are a few tips about how to find the most suitable solution.
Questions to Ask Yourself before Starting to Search for Small Business Loans
Making a responsible decision is essential to be able to use the loan money the right way and for the benefit of your company, so make sure you evaluate your needs and possibilities based on the following factors before contacting lenders:
- The amount you need – applying for a loan that is too substantial might hinder your chances of obtaining the funding and make repayment difficult, but applying for too little might not allow you to put your ideas into practice
- How urgent the loan is for you – some loan lenders take relatively long to evaluate loan applications, while other act faster
- Repayment term – evaluate your needs and possibilities based on loan terms as well
- Collaterals – decide if you can or you are willing to back your loan application with a collateral to increase the amount you are eligible for
- The purpose of the loan – commercial mortgage loans or loans for equipment leases are usually easier to obtain than loans for less palpable projects that involve no acquisition of assets.
Government Small Business Loans – Some of the Best Loan Solutions
The government and its agencies are not loan lenders themselves, but they facilitate access to loans by means of the Small Business Administration and through a network of supported lending institutions. Guaranteed in 75-90% by the government, small business loans are available to you from these lenders with very favorable conditions. The Small Business Administration has offices in every state, so to find out more about loan opportunities, you can visit the agency’s official website or contact the SBA office in your state.
Small Business Borrowing from Conventional Loan Lenders
Non-SBA lending institutions also offer loans for small businesses, but in most cases the eligibility and repayment conditions are a bit different, given that the loans are not guaranteed by the government, with the approval process being somewhat faster.
Business Loans from Alternative Lenders
Used mostly by businesses with less than great credit scores, loans and cash advance solutions from alternative lenders can provide a good solution for temporary needs. The approval processes with these loan applications are the shortest – in many cases you will get a reply from them within a few days. However, the repayment conditions can be less favorable, with interest rates much higher than the rates practiced by SBA-lenders or other conventional creditors. However, if you need the money quickly and you have a good plan for repayment, the right small business loans from alternative lenders can work great for you.