Where to Find the Best Small Business Loans and How to Get Them
Funding a small business means finding a way to get credit when it seems like no one wants to give it to you. It’s not so much that, it’s just there are specialized programs for small companies, and you need to know what to expect from lenders before you ask them for financing, so you don’t wind up asking for something they just aren’t prepared to give.
A lot of entrepreneurs approach banks and credit unions straight away. These institutions can be great for long-term business loans when you’re buying commercial property or costly equipment, but they do have income requirements, and they also tend to tie loans to assets. For smaller companies that don’t have the income to access these loans, banks can be a great credit resource, though, because they often make business credit cards available at competitive rates.
Of course, you don’t need a bank to get business credit. Financing companies and alternative lenders have been arranging credit lines for companies with great rates, and they can be even more flexible than cards because they allow you to make cash withdrawals when you’ve got a balance available. Those same institutions offer small business loans for cash flow and business credit cards, so they’re great to keep in mind.
No review of small companies’ options would be complete without mentioning the SBA. This government office exists to guarantee loans for small companies when they are making bigger purchases. This makes it possible for a small company to get loans for equipment and real estate through financers when they would not normally meet the income requirements. There is an approval process that reviews the company’s finances for health and stability to keep the program funding companies with a good chance of success, too.
If you want to get a small business loan, the first step is to clean up your debt and your credit score. Pay down outstanding credit lines if you have them. If you don’t, the best way to establish a good credit score from scratch is through simple and accessible tools like business credit cards and credit lines. After a while, regular use of those tools and repayment of the balance will help establish the history you need for a longer-term loan. You should also consider options for loans through the SBA, which is often accessible to those with shorter credit histories.
As your credit improves, you will be able to access more and more complex instruments. That will help you reach your goals by making your company able to command credit when needed.
