SMALL BUSINESS LOANS &
OTHER FINANCING OPTIONS FOR SMALL BUSINESS OWNERS:

There are several varieties of working capital loans that exist for small businesses that are already in operation. Typically to qualify, you will have to be in business for at least 2 years and have some financial documentation to prove that your business is a profitable venture. These documents include cash flow statements, balance sheets, credit history information and information regarding any outstanding loans you have.

Business capital loans can help with paying for equipment, assets and inventory. They can also help you cover your day-to-day expenses and payroll, especially if you are experiencing a gap in cash flow. Most small businesses experience fluctuations in profits and gains, which means that their working capital needs will often depend on the trends and seasonality of the moment.

A line of credit can be used as needed for a variety of business funding purposes. A line of credit can help you grow your business, start a new business or simply meet daily overhead costs. When you have a line of credit, you have access to an allotted sum of money and you pay interest on what you use, similar to a credit card.

Business line of credit is flexible and it works perfectly with small business loans as it charges interest only on the amount you use. This means business line of credit allows you to withdraw funds as your business needs. Line of credit is best in case your business has to cover for some unexpected expenses. Once you repaid the amount you’ve borrowed you can withdraw again up to the credit limit.

In today’s climate, it is much easier for women to succeed as small businesses owners. There are many grants and financing options specifically delegated for women to help them advance their careers and entrepreneurial prospects. There are long term loans, short term loans, working capital loans, funds and other grants available. As a woman, you can also refer to the SBA for low interest funding options. The SBA offers Microloans of up to $50,000 for groups that are typically under-represented like minority groups and women.

However, if you are not a woman looking to start a business, there are other lending options that are accessible to a broader applicant pool.

Aside from issuing loans to female entrepreneurs, the SBA administers loans to all kinds of applicants, including those who are starting a new business. However, the requirements for business start up loans can be strict.

It can be especially hard to acquire a start up business loan if you have no prior record of starting a successful business. It can also be difficult if you start and abandon new projects frequently. You will also need to prove that there is a real market niche for your business by showing that you have done market research about the viability of your project. This business plan will show how you plan to attract potential customers, grow your brand and fit into the market.

Depending on the lender, you will be required to show either your personal credit score or business credit score. Typically a credit score of 600+ is required to secure a loan. However some lenders do administer loans to applicants with bad credit too.

A detailed report that paints a picture of how much cash is entering and leaving your business.

An illustration of the financial health of your business. A balance sheet shows the assets and debt/liabilities of your business.

There exist both secured and unsecured business loans. With a secured loan, you will need to front some collateral in the form of an asset (savings account, real estate acquisitions, vehicles and so forth).

Having a good DTI ratio is crucial because it shows lenders that you have invested money into your business and are also able to pay off debt. You want to have a DTI at 43% or lower.

It is important to show lenders that you are serious about your business. Lenders want to see that you have been in business for at least 2 years.