Small Business Loan Types and Requirements - USA
Small Business Loans are loans given to businesses who have been operating for less than 5 years. These loans are designed to help these companies get off the ground and start making money. There are many different types of Small Business Loan programs available today including SBA Loans, Merchant Cash Advance, and Microloans.
Business Loan Types
1. SBA Loans
The Small Business Administration (SBA) offers two types of loans; 7(a) and 504. A 7(a) loan is offered to small businesses that have been operating for less then seven years. A 504 loan is offered to small business that have been operating for five to ten years. Both of these loans are guaranteed by the United States government.
2. Merchant Cash Advances
A merchant cash advance is a short-term unsecured loan that is used to fund inventory purchases until the company receives payment from its customers. Companies use these funds to purchase products that they sell online or at their physical location.
3. Microloans
Microloans are loans that are smaller than traditional loans. They are generally between $500-$1500 and are meant to provide financial assistance to people who need it.
Business Loan Requirements
1. Business Plan
A good business plan is the first step towards getting a loan. A well-written business plan should include information about the company's history, products/services, target market, financial projections, marketing strategy, competition analysis, and management team.
2. Financial Statements
The financial statements of a business provide a snapshot of its current position. These statements show how much money the business has, what expenses have been incurred, and what assets and liabilities exist.
A good business plan is the first step towards getting a loan.
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3. Credit Report
Your credit report includes details about your personal finances, including any outstanding debts, tax liens, judgments, bankruptcies, foreclosures, and collections. Your credit score is based on these items.
4. Bankruptcy Filing
Bankruptcy filings are public records that list companies who have filed for bankruptcy protection. If you file for bankruptcy, you may want to keep this fact private until after your case is closed.
Get references from family members, friends, co-workers, landlords, and others
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5. Personal Guarantee
If you're applying for a loan for a business owned by yourself, you'll need to sign a personal guarantee. You'll agree to pay back the loan if the business fails.
6. References
References are people who know you and can vouch for your character. Get references from family members, friends, co-workers, landlords, and others who've had contact with you.
7. Loan Application
Loan applications are filled out online. Make sure you fill them out completely and accurately. Include all relevant information, such as the amount of the loan, interest rate, repayment terms, collateral, and any additional information requested.
Lastly, it also helps to have a great professional business website that lists your products/services, customer reviews, contact, about, etc to impart more trust and confidence to creditors. Checkout our affordable website pricing and packages.