Small Business loan
A small business startup loan is capital designed to assist a new organization in its endeavor to generate profits. Business startup loan funds can go toward numerous things such as the acquisition of inventory; supplies; machinery, equipment, supplies, and real estate; and the acquisition of building equipment. In many instances, startup business loans are used to acquire commercial property to establish a company’s presence in a particular geographic area or country. The Small Business Administration or SBA, which is a government agency that regulates business lending, outlines a number of guidelines and requirements that must be met in order for a business to obtain startup business loans. Among these guidelines are the following:
In order to qualify for startup business loans, business owners need to ensure that they can repay the loan using their own personal assets. To do this, most lenders require business owners to place their personal assets, such as their car, house, etc., as collateral. In some cases, where the collateral cannot be verified, lenders may consider personal belongings kept at the residence as collateral. To ensure that you do not fall victim to this type of lending stipulation, it is important to discuss your personal finances with an experienced loan officer to discuss your options.
Another option for startup business loans is invoice financing. Invoice financing is defined as the lending process by which an individual or a company procures a loan based on the repayment capacity of the recipient. Invoice financing can be accomplished in two ways – through direct lender involvement or through third-party financing. In the former case, business owners submit their invoices to their chosen lender(s) and agree to repay the invoice balance at the end of the applicable month. In the latter case, a third-party financing company acts as a middleman and collects monthly payment from the business owners.
SBA loans are not limited to start-ups. Small businesses can also get matched for capital through Small Business Administration loans and commercial mortgage insurance (CMIA). The Small Business Administration offers assistance to businesses with low-income homeowners as well as those needing assistance with credit card debt. If you are a small business owner, it is best to apply for SBA financing before going for a commercial loan. For information regarding this type of loan and details on how to get matched with capital from the SBA, contact the agency directly.
Start-up business loans provide a short-term solution to immediate cash needs of small businesses. For this reason, start-ups can obtain financing in as little as six months, although the amount may vary according to the specific financial commitments made by the business and its credit history. Small business start-ups may use long-term working capital loans to finance marketing expenses and buy new equipment. Long-term financing can also help small businesses take advantage of tax credits and depreciation expenses.
Personal loans are another popular category of small-business loans. Personal loans are usually used for smaller purchases, such as computers and clothing. Personal loans are perfect for business owners who need more than their business bank account can readily furnish. For those eligible for SBA financing, personal loans can be approved without a business check, because they do not require business asset ownership. In order to qualify for personal loans, business owners must meet credit criteria.
Another category of small business loans is based on the owner’s capital reserve. Capital reserve financing refers to funds that an owner plans to reserve for unexpected expenses. If the owner anticipates that his or her business will incur expenses exceeding its current assets, then the owner can use reserve financing to fund these expenses.
There are many other small-business loans available for start-ups. Many business owners find start-ups intimidating because of the amount of paperwork and questions they must face. Business start-up funding eliminates many of these worries and provides immediate cash to get the business up and running. Small business loans are perfect for start-ups and are often the first source of credit for new businesses.