Lendio is constantly consulting with owners of small businesses to find ways to make their lives easier in the often-complicated world of finance. How to get small business loans is always a major topic in these conversations. Most of the entrepreneurs we speak to have three key questions. Today, I’m going to help entrepreneurs everywhere by answering these questions:
Where Can I Get a Small Business Loan?
There is one key pain point that the legions of business owners we meet with from coast to coast always bring up. It usually goes like this, “It takes too much time to get approval for a business loan. I’d prefer to spend that time working on developing my business.”
We understand exactly how you feel.
Former US Small Business Administrator, Karen Mills, recently completed research on the state of small business lending. In her study, she comments that it a small business owner can spend as much as 26 hours looking for a loan. Entrepreneurs go to at least three financiers in the process.
The time spent looking for a suitable loan is not the only drawback. Only one in ten entrepreneurs who apply for financing at their local bank actually get the loan they’re looking for. So business owners spend all this time looking without any success. There must be a better way.
A lot of small business owners are now browsing the Internet to satisfy their need for financing. That’s where Lendio comes in. Lendio uses technology to pair small businesses to the best finance options based on their owners’ responses to a small number of simple questions. We have joined with a network of over 70 lenders to deliver as many small business loan options as possible in one place.
Rather than going from one bank to another or browsing each of their websites, you can just answer a few questions and a number of finance options will show up on your screen. See your business loan options for free.
How Much Money Do I Qualify For?
You’d think that this is easy to determine. We have observed that there is certainly a misalignment of expectations when talking with the business owners. Several of them needed more than they could reasonably qualify for. How can you tell what you qualify for? It actually depends on a few considerations:
- Time in business
- Monthly business income
- Credit score
- Volume of credit card transactions
- Amount of equity in your home
We’ve tried to make it simple since it’s not easy to get explicit information about these benchmarks broken down in layman’s terms. Lendio’s technology takes your responses to the above questions and matches you to the amount you can qualify for. You’ll see prospective financiers along with recommended loan amounts once you complete the process.
What is the Cost of the Business Loan?
Small business loan costs are usually defined by the repayment terms and the rate of interest. You can expect higher rates if your business profile is risky – this is standard for any loan. Data points such as how long you have been in business, your credit score, your monthly and annual revenues, and any collateral you happen to have.
High-risk small business loans tend to have shorter repayment periods. The opposite is true of low-risk small business loans. In some cases, you may need money fast, and the chance to develop your business outweighs the cost.
Usually, a term loan with a low-interest rate from a conventional financier like a bank takes anywhere from a few weeks to a couple of months to consider the application and endorse the loan. The cost of capital is higher for non-bank financiers, but they can often process your request in a few days.
We’ve seen it over and over again: even when the capital is high-priced, investing right at the correct time can enable your business to grow and thrive. You can start the process here if you want to see potential rates available to you based on your situation.
We’re fanatical about making the process easy to understand, after speaking to hundreds of business owners and really understanding the trials related to getting a small business loan. We hope you’ll take a look at Lendio’s strategies to find out how to successfully secure a business loan.