Bank loans are among the most difficult types of small business loans to obtain. The reasons for this may include lack of collateral, bad personal credit, and low sales volume. While banks are one of the most traditional sources of small business loans, they are not always the most affordable. Another option is to look to nonprofit microlenders, who lend small amounts up to $50,000, but will charge a higher APR than a traditional bank loan. In addition, microlenders often require detailed business plans and financial statements.
A traditional SBA loan application process can take months to complete. The entire process involves several entities, each of which has their own set of requirements. If you do not have the time to wait months for your loan application to be approved, you should consider other sources of financing. Before applying for an SBA loan, you should familiarize yourself with the different types of small business loans available. Here are some ways to increase your chances of getting approved.
Business line of credit
A business line of credit can range in size from $2,000 to $250,000, depending on the lender. Unlike a traditional loan, you won’t have to pay interest on the full amount of the loan unless you use it. However, if you miss payments, you may have to pay a fee. These fees can be as much as 1% or even more of the original loan amount. Be careful not to get greedy when applying for a business line of credit.
While many banks and online lenders have small business loans, Funding Circle does not. This online lender connects you with investors and lenders. If your application is approved, you will receive a phone call from a representative. They will gather the necessary paperwork and do a soft credit check. A dedicated account manager will help you review the loan terms. You can pay your loan back over a fixed period of time or in monthly installments.
As a small business owner, you may be wondering if getting a small business loan from a traditional bank is difficult. The good news is that Lendio makes the process easy. You can apply for a loan through the website in as little as 30 minutes and receive recommendations from personal account managers. The application process is free, and Lendio shops your information around to their network of lenders.
If you’re looking for the easiest small business loan, OnDeck might be the right choice for you. OnDeck doesn’t require collateral and can approve small business loans with a credit score as low as 600. The company does charge an origination fee of 2.5% to 4% of the total loan amount, but these fees fall to 1.25% or 3% on your second and subsequent loans. OnDeck also reports its payment activity to the business credit bureaus, so you can build business credit by making timely payments.