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For example, a $500,000 loan will cost you more than a $10,000 loan because, obviously, it requires you to pay back $500,000 and not just $10,000. Of course, you need to remember that a loan calculator only gives you estimates. So make sure you ask a lender for hard numbers before committing to a loan.
So, review your financial documents carefully to ensure they accurately reflect your business’s finances, and its earnings and growth potential. Once you have your financial documents in order, you can determine how much you’ll need for your business loan. If your loan sum exceeds what you need, you could wind up paying unnecessary accumulated interest. On the other hand, if you request too little, you might need to apply for an additional loan, which will come with its own interest rate and payment plan.. The younger your business, though, it’s likely you’ll have fewer options for lenders.
Types of Business Loans
SBA loans, available through banks and credit unions, are available as SBA 7 loans, microloans and other loans designed for specific purposes. Rebecca Safier is a personal finance writer and certified student loan counselor specializing in consumer loans and money management. Formerly a senior writer for LendingTree, her work has been published in U.S. News & World Report, MarketWatch, NextAdvisor, and other publications. She has also contributed expert commentary to Entrepreneur, Money.com, NBC, and more. When she’s not reporting on all things personal finance, Rebecca teaches blogging and SEO strategies on her website, remotebliss.com.
Small Business Administration guarantees general small-business loans with its 7 loan program. The SBA also has a 504 loan program that helps fund the purchase of land, buildings or equipment through long-term, fixed-rate financing. While looking at your annual revenue, you should also consider your cash flow — and evaluate how much you can afford to apply toward loan repayments each month.
Can I get a business loan with bad credit?
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Community Development Financial Institutions
Your bookkeeping and accounting processes should include tracking your assets, revenue, debt, and expenses. For a business loan, you’ll need to provide proof of cash flow and accurate financial projections. Lenders will want to see your financial reports and realistic forecasts with the loan factored in to accurately estimate your business’s future revenue and expenses. For instance, business loans for bad credit might only require 500 and above. At the other end of the spectrum, some loans may have higher minimum credit scores depending on which loan type.
Choosing the type of loan that best suits your needs and repayment ability is essential. You should take out a loan with the idea that it will help your business, not saddle you with debt. Once you’ve chosen a business loan that works for you, submit an application and wait to hear back from the lender. If the lender requests any other documentation, a quick response can help get your loan funded sooner. This can be an expensive form of financing, but it can give you quick access to capital. With invoice factoring, you sell your unpaid invoices to a third party for a portion of their value.
However, business loans can range anywhere from $1,000 to $5 million or more, depending on the lender, type of business loan and your finances. If you can’t make your current loan payments, you may be able to talk to your lender about your payment schedule first — before choosing to refinance. If you can save on borrowing costs, refinancing may be a good option for your business.