Find the Right Business Loan to Fit Your Business Needs

5 min read • May 13, 2016 • Tyler Heaps

Considering the array of business loan products available to small business owners, finding the right lender for the business loans you need can be a difficult task. Before you set out to look for the credit you need, you must first carefully work out your requirements and match them with the business loan product and its terms and conditions.

You could be an entrepreneur looking for capital to start up your enterprise or you might need funds for the expansion of your business or to meet any short-term funds shortfall. You can get traditional business loans from banks, Small Business Administration or SBA loans that the government supports or other credit that various lending institutions make available to you.

Business Loan for New Businesses

  1. Small Business Administration or SBA Loans: This form of business credit is ideal for entrepreneurs gathering funds for a startup venture. If you have only average credit scores and cannot get approval for the loan products you need from banks, getting these loans is possible because the government guarantees 75% to 90% of the loan. In this way, much of the lender’s risk is covered. However, you need to prepare for extensive paperwork, extra fees, and delays in the approval procedures. You might also have to meet the criteria and other stipulations the loan providers lay down. You can use these loan products as working capital, for purchasing machinery, property, and any other materials, improving leaseholds and the miscellaneous expenses needed to establish your business.
  1. Crowdfunding Loans: Entrepreneurs with a great idea that can work as a viable business opportunity can use this strategy to collect the funds they need even if they don’t have impressive personal credit scores. If they can convince a large enough group of people about the feasibility of their idea, they can collect small contributions and begin working. Such entrepreneurs can contact nonprofit lending institutions and crowdfunding portals.
  1. Loans for Professionals: New professionals looking to set up their practice can make use of these loans. You might be ready to work as an accountant, engineer, healthcare provider, or architect. Or, you could have chosen the veterinary, legal or insurance sphere. You’ll need funds for purchasing and renovating office space, buying equipment and other tools, refinancing debts and student loans.
  1. Loans for Franchises: Entrepreneurs can use franchise startup loans to build and open stores and restaurants. Many banks and other lending institutions offer business credit that you can to pay the franchise fees and buy property, machinery, and equipment. Also, use these funds as working capital.

Loans for Established Businesses

  1. Bank Loans: If your company has been running successfully for a few years now and has a solid business credit score, perhaps, your bank is the ideal source to look for business loans. The bank where you have a checking account and is the provider of the credit card you’re using is likely to have fewer terms of usage. Though they offer you loans at lower interest rates and approve your loan faster, they may have shorter repayment time limits.
  1. Merchant Cash Advance: Companies that have a high volume of credit card sales find that this is a convenient loan option. You’ll receive a cash advance within a couple of days of your loan application and the minimum of paperwork. To pay back the loan, you’ll allow the lender to withdraw a section of your credit card sales every day until the loan amount has been cleared in full. Although easy to access and repay, these loan products are typically expensive.

Loans for Newly Established Businesses

  1. Microloan Programs: Companies that have been in operation for only a short while can opt for the microloan programs offered by SBAs. You can use these funds to help with the growth of your small business. For instance, you can buy equipment, inventory, furniture, and any such items aside from fixed assets like real estate. Though you cannot use them to pay off any debts you’ve incurred, the loan provider does consider the purpose of the business loan when considering approval. Typically, lenders extend this credit for six years at a time.
  1. Lines of Credit: If you need small amounts of funds for your day-to-day expenses, and you’ve been in business for a short while only, lines of credit could prove to be a quick way of getting the business credit you need. You can receive approval for lines of credit within 24 hours, and the repayment term is typically 90 days. The biggest advantage of these loans is that you need to pay interest on only that portion of the loan that you use. If you have an inadequate credit score and find it impossible to apply for and get loans from conventional lenders, these loans can help you build the score. That’s because each timely payment you make is reported to the credit reporting agencies. Further, you won’t need to provide any collateral for these loans.

Loans for Purchasing Equipment

Some lenders offer business loans for the sole purpose of buying equipment such as office machinery, furniture, tools and other equipment that you may need for running your enterprise. You may not need to make large down payments and instead, pay for your purchases in small monthly increments. These loans might also have lower rates of interest since the equipment you’ve bought acts as collateral. And, since you won’t need to block a lot of funds at a time for the machinery you need, you can continue to work with larger cash reserves. The tax benefits you earn by way of write-offs are yet another advantage as is the short approval times that can be as low as a week. These loan products can be used by any business credit seekers whether entrepreneurs or owners of established enterprises.

Lendio helps you find the right small business loans to meet your needs. Simply answer a few basic questions and instantly see your funding options and rates. Once you select the best business loan to meet your funding needs you will be contacted by a funding manager to help walk you through the entire funding process. This allows you to focus on the most important parts of your business. This also ensures you get the best funding rates by allowing you to compare multiple lending options all in one place.


Tyler Heaps

Tyler is a member of the Lendio marketing team. He is passionate about digital marketing, small business, and helping small business owners succeed. Tyler is an outdoorsman and loves spending time with his family.