Should You Look Into A SBA Loan?

Should You Look Into A SBA Loan?

Wise business owners explore the requirements and terms of the lending options available. And there are several different types of small business loan products to choose from. Depending on the lender, some may be a better choice for your business than others. Each loan product will have its own set of qualifying criteria, payment schedules, risks and benefits.

What is required?

The typical go-to lenders, according to aboutmoney.com, include banks, the Small Business Administration and credit unions, but the majority of small business owners are seeking alternative lenders to get the funding they need with more customized solutions.

Here is a look at the basic small business loan requirements with each lender:

Banks:

According to bloomberg.com banks look for excellent credit, extensive financial history and collateral. Essentially, if you are in a position where you do not need money, then you will qualify. Banks tightened their loan requirements after the credit crisis of 2008, and have not altered them much since.

Bank Loan Requirements:

  • You need the flexibility of time. Loans can take 30-60 days to process.
  • You typically need an excellent credit score and credit history to even be considered.
  • You need to have been in business for at least three years and have documentation to prove your financial stability.
  • The bank requires an extremely detailed business plan. They want to know everything about your business, marketing plan, and your tax and bank records. The process is rigorous.
  • Proof of collateral, or valuable property, is required for them to take if you default on the loan.

Small Business Administration Loan

The Small Business Administration (SBA), is a government agency that can be helpful for some, but once more you must be able to meet their requirements and you should be prepared that the process will take even longer than with a bank.

SBA Loan Requirements:

  • You will need good, solid credit and some collateral
  • Time to process and give approval. You may wait up to 90 days or more to get your loan.
  • Your resume, to look at your managerial and business experience
  • The require a very detailed overall business plan that includes your past, present and future plans.

Merchant Cash Advance

A merchant cash advance is often overlooked, but it is often the best chance for small merchants to get funding – and without the crazy payment schedule.

Merchant Cash Advance Requirements:

  • That you fill out a page application, which can typically be done online.
  • A couple of months of bank records.
  • A few days to process the loan and get money in your hands.

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