Lending Library

Every small business owner looking for financing should understand the fundamental differences between a business line of credit and a term business loan. 

Both types of financing can be useful, but they do serve slightly different business needs. Applying for the right type of capital at the right time ensures that you don’t run into any problems down the road—or create more problems down the road.

Here, we’ll look at term loans and lines of credit, the requirements, benefits, and drawbacks of each, to help you determine which is the right option for your small business.

What is a business term loan?

A term loan is a fixed funding transaction. It is a one-time loan based on the current cash flow of your business (often plus collateral that you pledge to secure the loan). 

With a term loan, all of the proceeds are available at the time of closing. The lender bases your payments, interest, and principal on the amortized loan terms. For example, your business might take out a $100,000 loan at an 8% fixed interest rate over a 5-year term. Interest rates and monthly payments on term loans are generally fixed for the life of the loan. 

If your term loan is secured (many are), the bank will assume an ownership position on the collateral you offer. This means you cannot transfer or liquidate the collateral you use to secure the term loan until you make the final loan payment.

The typical use for a term loan is to finance a major expenditure. However, it can also be used to cover daily cash flow expenses.

What is a business line of credit?

A business line of credit (LOC) is like a cross between a short-term business loan and a business credit card. When you open a business LOC, the lender approves you for a credit limit on the account. This credit limit represents the maximum amount of money your business can borrow at a given time. 

As your business uses its credit limit, less money is available to borrow in the future. But your business can repay the money it borrows (plus interest) and regain access to the same credit line—as long as the business LOC remains in good standing. 

As you borrow against the available credit limit, you accrue interest charges each month. You’ll only pay interest on the amount of money withdrawn.

A line of credit has the potential to be a great cash flow management tool. A study by Intuit found that 61% of small businesses face cash management challenges.

Smart uses for a line of credit include stocking up on discounted inventory, financing for marketing campaigns, covering temporary payroll needs, and more.

Making the choice: Term loan or line of credit?

To determine which option is better for your business,start by answering the following questions:

• Why does your business need financing? How do you plan on using the capital?
• What type of products or services do you offer (and what is the life of those goods)?
• Is your business able to satisfy stricter lender borrowing requirements (with regard to credit, revenue, and time in business) or do you need a more lenient approval process?
• Are your capital needs long-term or short-term?
• What is your standing as a borrower (i.e. credit score, time in business, revenue, etc.)?

Based on the answers to these questions, you can decide whether a loan or line of credit is more appropriate.

If you have great credit, along with sufficient revenue and time in business and you want to borrow money to expand your business, a business term loan would be a solid choice. However, if you have credit problems, your business is relatively new, or you need repeated access to a cash flow financing solution, a line of credit is likely better for you.

Differences between business lines of credit and term loans

A term loan can be an attractive financing solution due to its competitive interest rates and borrowing terms. That said, lender qualification criteria for a business term loan can be more challenging to satisfy compared to other types of financing for small businesses.

A business line of credit is a flexible funding resource that can be useful for many small businesses. Interest rates may be higher with LOCs compared to some term loans and other business financing options, but lender qualification standards are often more forgiving as a tradeoff.

The key differences generally lie in what costs are included, and how you're required to repay your loans.

Lender requirements

Ideally, in either case, you’ll have a credit score above 700, annual revenue that exceeds $100,000 and have been in business for at least 2 years. Depending on the lender, however, these levels may vary. There are always options.

The recommended minimum requirements for each are generally as follows:

Repayment structure

Term loans offer many benefits to small businesses, including the fact that borrowers can often repay the funds they borrow over a longer period of time. Lenders typically require borrowers to make monthly (sometimes bi-weekly) payments with term loans. Longer repayment structures with less frequent payments can be friendly for investments in business growth that take time to provide returns. 

Lines of credit allow business owners fast access to capital during a time of need. 

As a tradeoff for speedy and flexible financing, business owners must often repay the money they borrow over a shorter period. In addition to expedited repayment terms, the payments themselves may also occur on a more frequent basis. Some lenders may require borrowers to make weekly payments toward the money they borrow from their LOC, though others may offer a less demanding payment structure.

Interest rates and fees

Term loans often feature lower interest rates than other types of business financing, including lines of credit. At the time of writing, you might find interest rates as low as ~6% with a business term loan, depending on your creditworthiness and other factors.

In addition to the interest rate a lender charges on your loan, it’s also important to factor in additional fees that could increase your overall costs. That might include origination fees, application fees, late fees, and prepayment penalties, as well as factoring fees and factor rates.

If you’re comparing term loans from multiple lenders to search for the best deal available, this free business term loan calculator from Lendio can help you crunch the numbers. 

Lines of credit often feature higher interest rates compared to business term loans and other sources of financing. Interest rates commonly range between 8% and 24% on business LOCs.With lines of credit, many lenders also charge annual fees, origination fees, maintenance fees, late fees, and other expenses. So, read the fine print before you sign any financing agreement. You can also use this free line of credit calculator from Lendio to compare the cost of multiple business LOC options. 

When should you apply for a business term loan?

If your business needs financing for any of the following reasons, a term loan is likely the better fit.

• Opening a new location - Expanding to a new business location requires a sizable upfront investment that might take time to produce a profit. A term loan can help you amortize the investment over several years.

• Hiring new employees - A term loan is a great way to handle the upfront costs associated with bringing on new staff and can provide a cash cushion for your business to manage increased payroll expenses.
• Renovations and capital improvements - A term loan can stretch out upfront renovation costs, enabling your business to continue to run without a sizable cash outlay.

When should you apply for a business line of credit?

The following situations are examples of when a business line of credit could be helpful to a business. 

• Cash flow management - Many small businesses struggle to bridge the gap between accounts payable and accounts receivable. With a line of credit, a business can use this resource to pay its vendors and repay the funds it borrowed once its customers pay their invoices.
• Seasonal sales cycles - Businesses that have a busy season could use a line of credit to ensure a cash cushion during slower months.
• Inventory purchases - A business can draw on the line of credit to purchase inventory and pay it down when it sells the inventory at a later date.

The last thing to keep in mind– term loans and business lines of credit are not your only two options. Although these are two of the most popular and useful small business funding resources available, there are other types of small business loans you can consider if you feel like your business needs alternative financial resources.

The information in this blog is for informational purposes. It should not be used as legal, business, tax, or financial advice. The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (December 13, 2022). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.

Business loans are crucial for helping small businesses thrive by providing the necessary capital to cover startup costs, invest in inventory, or upgrade equipment. For many small business owners, these loans are not just a means to an end; they are a lifeline that enables them to seize growth opportunities and navigate the challenges that come their way. Therefore, it is vital to understand the current lending landscape that small businesses are facing.

Key stats.

• 68% of small business owners say access to financing is the most important factor in the growth of their businesses.
• 67% of small business owners have no preference about which type of lender they get a loan from.
• 85% of small business owners said that speed to loan approval is important when selecting a lender. 
• 77% of small business owners surveyed stated that they prefer to apply for a loan online or via a mobile app.
• 50% of small businesses say they don't know if the bank they use for checking has the right loan options for them. 
• Only 24% of small business owners apply through the bank they already work with.
• The average small business loan is $38,000.
• 59% of SBA loans are approved.

High-level overview.

Lendio recently surveyed 1000+ small business owners to better understand how financing affects the success of their business, their experience in today's lending environment, and how they view the future of small business lending. Of those small business owners, 68% said that access to financing is the most important factor in the growth of their businesses. Additionally, 46% of those 1000+ small business owners said they would see anywhere from 30-100% revenue growth if they had access to financing their business needs.

Lendio found that 78% of the small businesses it interviewed have a positive outlook on their ability to access capital in the next year. Perceptions vary based on how well-qualified the small business is for a loan. Only 12% of the most qualified borrowers stated that the majority of small businesses don't have access to the capital they need while 21% of the least qualified borrowers said the same.

Lendio found that while small business owners generally have a positive outlook on their ability to access capital, they have a fairly neutral perception of the loan application process. When asked which type of lender they'd prefer 67% of small business owners said they have no preference.

The takeaway:

85%

of small business owners say speed to loan approval is important when selecting a lender.

While larger enterprises are willing to experience lengthy loan approval and funding processes, small business owners behave more like consumers--they prefer a quick and easy loan process. 

• 85% of small business owners said that speed to loan approval is important when selecting a lender. 
• 77% of small business owners surveyed stated that they prefer to apply for a loan online or via a mobile app.

Lendio also found a general lack of awareness of the small business loan process. 

• 50% of small businesses say they don't know if the bank they use for checking has the right loan options for them. 
• Only 24% of small business owners apply through the bank they already work with. 
• Lendio found that 22% of small business owners either don’t know or don’t have a preference for their preferred type of business financing.

These findings point toward a need for more education about the lending landscape for small business owners.

Average business loan amount.

Understanding the average loan amounts small businesses receive is critical for entrepreneurs seeking to plan their financial strategies effectively. Businesses should be aware of not only the amounts they might qualify for but also how these figures align with their growth aspirations and operational needs. 

• The average amount a small business receives through Lendio’s marketplace is $38,000. 
• The average SBA loan amount in 2023 was $479,685.
• On average, small businesses are offered 50% of the loan amount they initially asked for.

SBA loan approval rates.

The Small Business Administration (SBA) plays a vital role in supporting small businesses by providing access to loans with favorable terms. In 2023, approximately 59% of SBA loans were approved (34% received full approval, 25% received partial approval), indicating that over half of small business owners successfully navigate the application process. This is particularly encouraging for entrepreneurs who might face challenges securing traditional financing, as SBA loans often come with lower interest rates and longer repayment terms.

Reasons for a business loan.

Lendio found that the majority of small businesses pursue loans for a variety of essential reasons, primarily to secure working capital (33%) to support daily operations and manage cash flow. Additionally, small businesses often seek financing for crucial investments like equipment purchases (19%), expansion efforts (15%), starting a business (14%), payroll (6%), real estate (4%), or for other purposes (9%). Each of these reasons highlights the integral role that loans play in facilitating growth and sustainability in the competitive business landscape.

Gender insights

Men and women generally had similar responses to Lendio's survey questions, but a few differences stood out.

Only 46% of women are positive or very positive that they can access the capital they need compared to 55.8% of men who said the same. 13% of women also rated their ability to access the capital they need as "very poor" compared to 9% of men.

Another key insight points to a need for education surrounding the business lending landscape, especially for women. 53.3% of women and 41.7% of men are unsure of their primary bank's loan options. More women business owners stated that they would like education on the business loan application process across the board except interest rates (this was equal). This includes lender types, loan agreements, and loan types.

Women-owned businesses received just 32.6% of approvals and 28.4% of the dollars offered in SBA 7(a) and 504 loans in the 2024 fiscal year. Across the lending landscape as a whole, women are less likely to receive the full amount of funds requested. In 2023, 45% of women-owned businesses were approved for the full amount of capital requested vs. 55% of men-owned businesses.

Additionally, 25% of women are denied a business loan compared to 19% of men.

Minority insights

When it comes to accessing business loans and receiving funding, entrepreneurs of color can face significant challenges.

• 84% of businesses started by a person of color relied on personal savings or funding from friends or family to fund their businesses. 
• 28% of employer businesses started by a person of color have obtained a business loan compared to 48% of white-owned business startups.
• Nearly half of black business owners who apply for a loan are denied.

Conclusion

Understanding the lending landscape for small businesses is crucial for their growth and success. The statistics presented highlight the significant role that access to financing plays in empowering entrepreneurs across the United States. While optimism prevails among small business owners regarding their ability to secure capital, challenges persist, particularly for women, minority, and veteran entrepreneurs.

SBA loans are managed by banks as well as various online and nonprofit lenders. The Small Business Administration (SBA), which oversees this program, provides annual reports detailing the number of loans approved by each lender. Below, we highlight the SBA lenders that issued the highest number of SBA loans in 2023, categorized by program.

Best SBA 7(a) lenders for 2024.

The SBA 7(a) loan program remains the most sought-after option, offering flexible terms and various uses like working capital, equipment purchases, and real estate. Here are the top SBA 7(a) lenders (excluding Express and Community Advantage) by loan approval count, along with key details:

Best for speed to funds.

BayFirst National Bank

BayFirst offers standard SBA 7(a) loans and a specialized "BayFirst Bolt Loan" product--a loan up to $150,000 with expedited processing times. They are an SBA-approved lender.

Funding amount: Up to $5 million- General; Up to $150,000- BayFirst Bolt Loan

Term length: Up to 25 years- General; Up to 10 years - BayFirst Bolt Loan

Minimum credit score: 675 - General; 700-BayFirst Bolt Loan 

Time to funding: 2 weeks - General; A few days - BayFirst Bolt Loan

Best for a comprehensive business solution.

Newtek Small Business Finance

Newtek provides comprehensive solutions for businesses from SBA loans to business insurance and payroll processing. They are an SBA-approved lender.

Funding amount: Up to $5 million. 

Term length: Up to 25 years. 

Minimum credit score: Not disclosed

Time to funding: Not disclosed

Best for large loan amounts.

Live Oak Bank

Live Oak Bank is an online financial institution that specializes in providing a substantial volume of larger SBA loans, with an average loan size of $1.7 million in 2023. As an approved SBA lender, they are well-positioned to support businesses seeking funding.

Funding amount: Up to $5 million. 

Term length: Up to 25 years. 

Minimum credit score: Not disclosed

Time to funding: Not disclosed

Best non-bank lender.

Ready Capital

Ready Capital is a non-bank lender focused on SBA and USDA loans. They are an SBA-approved lender.   

 Funding amount: Up to $500,000 through IBusiness Technology Platform

 Term length: Up to 25 years. 

 Minimum credit score: 640

 Time to funding: As soon as six days after approval

Best for customer care.

Cadence Bank 

Cadence Bank provides a variety of SBA loan products backed by excellent customer service, and they are an SBA-approved lender.

Funding amount: Up to $350K

Term length: Up to 10 years. 

Minimum credit score: 650. 

Time to funding: As soon as two weeks

Best Community Advantage lenders.

A Community Advantage loan is a type of SBA 7(a) loan specifically designed to assist underserved markets by financing small businesses that may not qualify for traditional bank loans.

Below, we detail three noteworthy lenders who funded the most Community Advantage loans in 2023:

Best for businesses in major cities

CDC Small Business Finance Corporation

Small Business Finance Corporation provides loans to startups and small businesses across several major metropolitan areas. They serve a variety of industries, with dedicated specialists focusing on home healthcare and childcare sectors. Additionally, they offer complimentary business counseling to support their clients.

Funding amount: $10K-$350K

Term length: 6-10 years

Locations: Arizona; Atlanta, Georgia; California; Dallas-Fort Worth, Texas; Detroit, Michigan; Miami, Florida; Nevada, Washington, D.C. Metro Area

Requirements: No minimum credit score, sufficient cash flow to meet payments, business projections for early-stage/startups

Works with startups? Yes, with a 10% downpayment and management or industry experience

Best for businesses in Southern states

LiftFund

LiftFund provides access to capital for small businesses and startups throughout the Southern states. LiftFund also partners with other organizations to offer specialized loan programs to veterans and businesses in certain cities.

Funding amount: Up to $350K 

Term length: Terms usually range from 7-10 years.

Locations: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Missouri, Mississippi, New York, New Mexico, Oklahoma, South Carolina, Tennessee, and Texas.

Requirements: Cash flow sufficient to meet payments

Works with startups? Yes with 20% owner injection.

Best for businesses in Wisconsin

Wisconsin Women's Business Initiative Corporation 

This nonprofit organization specializes in providing financial and educational resources to entrepreneurs in Wisconsin. In addition to loans, the nonprofit offers one-on-one business coaching and operates as a Veterans Business Outreach Center.

Funding amount: Up to $350K

Term length: Up to six years 

Locations: Wisconsin

Requirements: Business plan with three years of financial projections

Works with startups: Yes- if the owner has extensive industry experience.

Top SBA Express Loan lenders.

A subset of the SBA 7(a) program, SBA Express loans are designed to provide rapid access to financing for small businesses, with approval times significantly shorter than traditional SBA loans. Below are the top three SBA Express loan lenders of 2024 based on number of SBA Express loans approved in 2023:

The Huntington National Bank

Huntington National Bank is one of the most experienced SBA lenders having approved the most SBA Express loans in 2023. Current customers can apply online for a loan of up to $350,000. The bank also runs the Lift Local Business Program which supports minority, woman, and veteran-owned small businesses through business planning support, free financial courses, and loans with reduced fees and lower credit requirements. They are an SBA-approved lender.

TD Bank

TD Bank provides SBA Express Loans of up to $350,000 and features an online application for loans up to $250,000. Beyond their loan program, the bank also manages an equity fund specifically designed for SSBICs and CDFIs, aimed at offering small business loans to minority-owned and women-owned enterprises. As an SBA-approved lender, TD Bank is committed to supporting diverse business initiatives.

U.S. Bank

U.S. Bank also offers Express loans up to $350,000 with an online application available for amounts up to $250,000. The bank also offers a Business Diversity Lending program for minority, women, and veteran-owned businesses for loan products outside the SBA program. They are an SBA-approved lender.

Top SBA 504 Loan lenders.

SBA 504 loans are designed to provide financing for major fixed assets, such as real estate and equipment. SBA 504 loans follow a 50-40-10 model where 50% of the total loan amount comes from a bank loan, a Certified Development Company (CDC) provides 40% in the form of a debenture or bond, and the remaining 10% is the down payment from the small business owner. 

A Certified Development Company (CDC) is a nonprofit organization that facilitates the SBA 504 loan program. Each CDC operates within a designated area and is tasked with working closely with small businesses and lenders to approve and process 504 loans. We list the CDCs with the greatest amount of CDC loans approved in 2023 below. You can search for a CDC that operates in your state on the SBA website.

How to find an SBA microlender.

An SBA microloan is a loan of up to $50,000 administered by a nonprofit lender. Similar to a CDC, these lenders operate locally. To locate an SBA microlender, start by visiting the SBA’s official website where a list of approved lenders and resource partners is available. You can also utilize the SBA’s local district offices as they often have details on microlenders in your area.

How to choose an SBA lender.

Selecting the right SBA lender involves considering several factors. Here's how to make an informed decision:

Evaluate Your Needs 

Determine the type of SBA loan that best suits your business needs. Whether it's a 7(a) loan, a 504 loan, or a microloan, understanding your requirements will help narrow down your choices.

Compare Lenders 

Research and compare lenders based on their loan offerings, interest rates, terms, and customer reviews. Look for lenders with a strong track record of supporting businesses similar to yours.

Seek Personalized Service 

Choose a lender that offers personalized support and guidance throughout the loan process. A dedicated loan officer can help you navigate the complexities of SBA lending and increase your chances of approval.

How to Get an SBA Loan through Lendio.

Lendio is an online marketplace that streamlines obtaining SBA loans for small businesses. By connecting users with a network of lenders, it allows business owners to compare financing options through a single application. Lendio's loan experts help gather necessary documents, making the process easier. Loans are typically funded in under 30 days, depending on the lender and documentation completeness.

Methodology

Top lenders were selected based on the number of SBA loans approved in 2023 as reported by the Small Business Administration. Lenders were also evaluated based on their lending criteria, application process and whether they are an SBA-Preferred lender.

*The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (August X, 2024). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.

Even though the acronym UCC sounds like a college of some sort, it stands for the Uniform Commercial Code (UCC). And rather than hand out diplomas, the UCC was developed to regulate how commercial transactions operate.

OK—But what's a UCC filing?

UCC filings are how lenders establish their right to the assets you, the borrower, use to secure a loan. The filing serves as a lien, so that there's public record of your efforts to take out a loan.

UCC filings are made up of UCC-1 and UCC-3 filings, explained in more detail below.

What is a UCC-1 filing?

A UCC-1 is the official original UCC filing that gets made by a lender, referring to the UCC1 form that's needed in order to do so. It's effectively a public announcement lenders make that either a borrower has taken out a loan with them or is looking to take out a loan with them.

This filing defines the collateral the borrower puts up to secure financing, which prevents a borrower from using the same collateral for multiple loans (a move that would put the lenders at much higher risk).

You could think of it as the financial version of “going public” on social media with a new relationship. Once you change that relationship status, other people who might be interested can see you’re already committed to someone else. They allow lenders to see how you’ve treated other loans in the past.

What is a UCC-3 filing?

A UCC-3 filing is simply an amendment to the original UCC-1 filing. 

This might be used to update the information of the borrower or lender, add or change collateral, terminate a filing, or reassign or terminate creditor interest.

What is the difference between a lien and a UCC filing?

Put simply, a UCC filing serves as a lien, whereas a lien may not always be a UCC filing.

Liens can span everything from personal property, to real estate, to tax liens, child support, and much more. UCC liens fall within this list as another subcategory.

Oftentimes, liens arise from legal issues, and can be created involuntarily—for instance, with a property lien. UCC liens are intentionally created by creditors to establish a security interest.

When does UCC filing happen?

This step depends on the lender and the loan product.

Some UCC filings happen after you’ve secured funding. Others are actually filed when you apply for funding so lenders can protect themselves from borrowers trying to get multiple loans at the same time without the lenders knowing about it.

SBA UCC filings

As a security measure, the SBA will file a UCC lien on EIDL loans of more than $25,000. In this case, the SBA establishes the right to any assets you use to secure your EIDL loan, in the case that the loan goes unpaid.

Is a UCC filing bad?

No. UCC filings aren’t bad, nor are they good. They are used as a safety blanket for lenders to secure loans they provide to borrowers. If you take out a loan that goes unpaid, the fact that there is a filing can become a bad thing, but the UCC filing itself does not impact your credit or ability to obtain future loans.

How do you know if you have a UCC filing?

To find if you have a UCC filing, or simply search UCC liens in general, you can use a public record lien search tool, which are usually available on a State-level.

Most states provide public databases of UCC filings. Click below to learn more about accessing UCC filings in your state:

(Note: In some cases, a subscription might be required for access.)

• Alabama UCC Search
• Alaska UCC Search
• Arizona UCC Search
• Arkansas UCC Search
• California UCC Search
• Colorado UCC Search
• Connecticut UCC Search
• Delaware UCC Search
• Florida UCC Search
• Georgia UCC Search
• Hawaii UCC Search
• Idaho UCC Search
• Illinois UCC Search
• Indiana UCC Search
• Iowa UCC Search
• Kansas UCC Search
• Kentucky UCC Search
• Louisiana UCC Search
• Maine UCC Search
• Maryland UCC Search
• Massachusetts UCC Search
• Michigan UCC Search
• Minnesota UCC Search
• Mississippi UCC Search
• Missouri UCC Search
• Montana UCC Search
• Nebraska UCC Search
• Nevada UCC Search
• New Hampshire UCC Search
• New Jersey UCC Search
• New Mexico UCC Search
• New York UCC Search
• North Carolina UCC Search
• North Dakota UCC Search
• Ohio UCC Search
• Oklahoma (individual counties keep UCC records)
• Oregon UCC Search
• Pennsylvania UCC Search
• Rhode Island UCC Search
• South Carolina UCC Search
• South Dakota UCC Search
• Tennessee UCC Search
• Texas UCC Search
• Utah UCC Search
• Vermont UCC Search
• Virginia UCC Search
• Washington UCC Search
• Washington, DC UCC Search
• West Virginia UCC Search
• Wisconsin UCC Search
• Wyoming UCC Search

How can you remove a UCC filing?

A UCC termination filing requires an amendment be made to the original UCC-1 filing, completed using the UCC-3 form.

Thing is, a UCC-3 form can only be submitted by the lender. To get a UCC lien removed, you must ask your lender to file a UCC-3 form, which then comes at their discretion.

In most cases, liens are not removed until you’ve fully repaid a loan.

In the end, UCC filings typically serve purely as an informational guideline—a “just in case” stipulation. It helps to be aware of any UCC filings you might have, but in general, if you’re paying your debts, UCC liens should not bring you any harm.

While some debt is considered good debt for small business owners—debt that ultimately helps the borrower net more in savings or income—other debt is deemed “bad debt.”

The latter includes debt that can directly and negatively impact a business owner’s credit score, or that costs money or potentially limits their ability to secure financing in the future. Past-due debt, sometimes referred to as “delinquent debt,” falls into this category.

What is past due debt?

Past-due debt is the money owed on a missed debt payment.

For example, let’s say you receive a credit card bill of $1,000 with a minimum monthly payment of $50. If you don’t make that $50 payment on time (usually within a month), it will become past due.

This debt payment will often accrue late fees and additional interest if not paid—and continue to accrue fees for as long as it remains unpaid.

You don’t necessarily need to pay the full $1,000 at once—but you missed the required minimum payment, which caused a debt payment to become past due.

Past-due debt can arise from anything that requires regular payments—utilities, rent, credit cards, business loans, and invoices. Any required payment that goes unpaid becomes past due.

What is the difference between past due debt and delinquent debt?

The difference between past due debt and delinquent debt is simply semantics. Debt that is past-due is also considered delinquent.

However, while any unpaid payment is past due, there are differing levels of delinquency. Each level has its own penalties and risks to your financial reputation. Here are a few examples:

• Within 10 days: Many lenders have a grace period of a couple of weeks during which you can pay off the debt. During this time, there aren’t late fees or penalties as long as you pay off your debt. (This grace window varies by the lender—some will charge a fee if you miss the payment date by even a day.) 
• After 10 days: You may receive a late fee for your delayed payment, but the lender won’t take any action against your account. 
• After 30 days: If you skip a full billing cycle, your creditors will likely report this missed payment to the national credit bureaus. This report can impact your credit score and add delinquency to your credit history.   
• After 90 days: If you continue to miss payments, you’ll likely accrue more penalty fees and interest. Your interest rates may increase, and your credit will keep dropping. Eventually, your creditor will send your account to collections and freeze any services you receive.

The impact of past due debt on your business

If you’re contending with multiple sources of debt, start with your past-due accounts. Late payments and delinquent debt can linger on your credit report and negatively impact your credit score.

With a poor credit score, loans (of any kind) will become harder to get—you’ll have to battle less favorable terms and higher interest rates, assuming you can get a loan at all. Paying off your overdue debts first could prevent your account from going into collections and affecting your credit score. 

If possible, make the minimum payments on all of your accounts—even if you can’t pay off the full balance. Hitting these minimum payments proves to creditors that you’re still willing to pay what you owe and aren’t going to fall into delinquency.

If you are ever in a situation where you’re unable to make the minimum payment, contact your creditor ASAP. Some credit card companies offer hardship programs where you can pause payments for a few months. Your other lenders may be willing to accept partial payments in the short run.

How long do late payments stay on your credit report? 

Payment history is one of the biggest factors of your credit score. Your history lets lenders know how likely you are to miss a payment or become delinquent on the account.

Because of its high value, a missed payment will stay on your credit report for 7 years, whether the missed payment is 30- or 90-days late. 

However, a missed payment might not affect your credit score for the full 7 years. If you only miss a few payments, then your credit score might rebound in a couple of years. Multiple factors contribute to your credit score, and maintaining a good payment history is one of the best ways to keep it strong.

How to solve your past due debt

If you have an upcoming loan payment that you can’t afford, don’t panic. Below, we’ll show you a few tactics to keep your lenders satisfied and your cash flow flowing when paying off your debts isn't a readily available option.

Find short-term financing

It’s always scary to fight debt with debt, but sometimes it’s necessary. If you’re struggling to make your loan payments, consider one of these short-term financing options:

• Business Lines of Credit: Use a line of credit to cover practically any business expense: payroll, rent, debt payments, supplies—you name it! You can get funds in as little as 1 to 2 weeks, and then you’ll get immediate access to any funds you use as soon as you repay the amount used.
• Business Credit Cards: If you don't qualify for a line of credit, a business credit card is another great short-term financing option. You can make your necessary loan payments on your credit card and earn cashback and travel rewards while you're at it. Plus, you can score a card with a 0% interest period (sometimes as long as 18 months), meaning you can make lower monthly payments with fewer consequences.

Negotiate with your lenders

Your lenders don’t want you to default.

If you’re struggling to make payments, they may be willing to temporarily restructure your loan. This act could mean lower interest rates, payment deferments, and extended terms.

For example, Bank of America allows businesses to request deferments on loan payments without negative credit reporting.

Funding Circle provides forbearance, repayment flexibility, and even late fee forgiveness. 

Talk to your lender and see what help they’re willing to provide. It doesn’t hurt to ask, and you might be surprised with their leniency.

Set reminders for your minimum payments

While your lenders will likely remind you about upcoming bills, you can also set payment reminders to ensure that you at least make your minimum payments.

These reminders will help you avoid past-due debt, even if you still need time to pay off your full balance. Making these small payments will help to protect your credit and your future financial opportunities.

If you’re too busy to remember to make payments, you can also set up autopay options to draft from your account. Just make sure you have enough money to avoid overdraft fees.

Boost your cash flow

Improving your cash flow is probably one of the harder options, but it’s still possible. To boost your cash flow, you’ll need to increase sales or decrease expenses (or both). 

Consider areas where you can cut spending. Every dollar counts. And then look for where you can grow your sales. With the digital world as your oyster, there are endless possibilities for making revenue online.

Don't give up

If you can’t make your loan payments, don’t give up. There’s a way out—you’ll make it through this. Hold your head up high and fight for your business’s survival.

A variety of reasons support buying a commercial property for your business. One is that it can give you the flexibility to adapt the building to your needs or expand your operations. Another compelling argument in favor of purchasing a commercial property is that doing so can help you build equity, which is an obvious disadvantage to renting.

Considering whether to buy or rent a commercial space can be difficult, and it is worth noting that those who rent will always, in a sense (and cents), be at the mercy of their landlord. If you have an opportunity to buy commercial real estate with a fixed-rate loan, however, you can make your expenses easier to manage and avoid the risk of either having to pay more in rent or move your business elsewhere.

Purchasing a commercial property for your business could also offer you an array of potential tax benefits and deductions. This includes depreciation and the chance to deduct the interest portion of the mortgage payment. In addition, when you locate your business in the commercial real estate investment, you could potentially deduct the maintenance expenses from the business income. Also, there is a chance you could pay rent to yourself as the property owner, and the rent would be a deduction.

What is commercial real estate?

Commercial real estate refers to properties that are used for business purposes. This type of real estate includes spaces where businesses operate, whether they're retail stores, offices, warehouses, or other types of buildings that generate profit.

Types of commercial real estate.

• Multifamily - As the name implies, this refers to residential investment properties housing multiple families, such as apartment complexes, duplexes, triplexes, and even assisted living communities.
• Office - This refers to large, small, or medium-sized buildings capable of supporting a variety of businesses with a need for space, such as medical providers, attorneys, or accountants.
• Retail - This type of commercial real estate refers to a space that a consumer-facing business may be interested in, such as a coffee house, department store, or a suite in a strip mall.
• Industrial - This term refers to warehouses, production facilities, and distribution centers—basically any type of building a manufacturer may need.
• Hospitality - This area generally covers buildings that are either the current or former home of businesses in the service industry, such as restaurants, hotels, bars, or resorts.
• Special Purpose: Properties specifically designed for a particular business, like hotels, schools, or self-storage facilities.

Within the confines of commercial office real estate, there are three different types.

• Class A refers to commercial real estate of the highest possible quality. These are usually newer buildings in a prime location and in good condition.

• Class B refers to middle-range commercial properties that may be older and lower in price compared to Class A, making them a good target for renovation or restoration.

• Class C commercial real estate refers to older properties in a less-than-optimal location with extensive wear and tear.

How to buy commercial real estate for your business.

Consider the following elements when beginning the purchase process.

1. Identify property requirements.

Understanding your personal goals as a commercial real estate investor is essential, as your goals will influence the property requirements. Are you looking to build a brand or a retail establishment? How much foot traffic are you hoping to attract?

When looking into commercial real estate, consider the following:

• Budget: Know what you can afford before you start looking.
• Zoning Laws: Ensure the property is zoned for your type of business.
• Accessibility: Make sure the location is easily accessible for your customers and employees.
• Future Growth: Think about your future needs and whether the property can accommodate them.

2. Secure financing.

There are a variety of commercial real estate loans available with different terms and commercial mortgage rates. Bear in mind that, unlike a personal mortgage that may be able to cover up to 100% of the cost of the property, a commercial mortgage will typically cover only up to 75% to 80% of the cost of the property. 

Commercial mortgage

This refers to any sort of financing where the loan is secured by the value of the underlying commercial asset, which could include a warehouse, apartment complex, office building, shopping center, etc.

SBA 504 loan 

The SBA 504 loan is a loan program administered by the Small Business Administration (SBA), in which small business owners partner with Certified Development Companies (CDCs) to secure financing. Usually, a 504 loan will include a first mortgage for around 50% of the cost, from a third-party lender. The SBA will back a second mortgage, up to 40%. This would only leave the remaining 10% to the small business owner, allowing that individual to free up capital. The loan can be used to expand, buy real estate, or purchase equipment.  

Hard money loan 

This type of financing originates from private individuals or businesses, instead of traditional financial institutions. Generally, a hard money loan refers to a nonconforming loan that can be used to purchase a commercial or investment property, often with a much shorter duration and a higher interest rate compared to other options. A physical asset or property is usually required to serve as collateral for this type of loan. 

3. Enlist an experienced team.

Buying commercial real estate can be a complex process, so it's essential to have a team of experienced professionals to guide you. Here are the key people you should consider involving:

• Real Estate Agent/Broker: Specializes in commercial properties and helps you find suitable options. They can negotiate on your behalf and provide market insights.
• Attorney: A lawyer with expertise in commercial real estate can help you with contracts, zoning issues, and legal due diligence.
• Commercial Lender/Mortgage Broker: They can assist in exploring financing options and securing a commercial real estate loan that fits your needs.
• Accountant: Provides financial advice, helps with tax considerations, and aids in determining the property's financial viability.
• Property Inspector: Conducts a thorough inspection of the property to identify any structural or maintenance issues that need to be addressed.
• Appraiser: Offers an independent assessment of the property's value to ensure you're making a sound investment.
• Contractor: If the property requires renovations or modifications, a reputable contractor can estimate costs and manage the construction process.

4. Evaluate the value of the property.

Determining the value of a commercial property is a critical step in the purchasing process. Here's how you can approach it:

1. Comparable sales (Comps): Look at recent sales of similar properties in the same area. These comps provide a benchmark for the current market value.
2. Income approach: Evaluate the potential rental income the property could generate. This method involves calculating the net operating income (NOI) and dividing it by the capitalization rate to estimate value.
3. Cost approach: Consider the cost of replacing the building with a similar one, including the value of the land and the depreciation of the current property.
4. Professional appraisal: Hire a certified appraiser who specializes in commercial real estate. An appraisal will give you a detailed report on the property's value based on various factors, including location, condition, and market trends.
5. Future potential: Assess the property's potential for appreciation. Investigate local economic growth, infrastructure projects, and zoning changes that might affect the property's value over time.
6. Physical condition: Conduct a thorough inspection to identify maintenance or structural issues. Properties in better condition typically command higher prices.
7. Market conditions: Stay informed about the current real estate market trends and cycles. The value of commercial properties can fluctuate based on supply and demand dynamics.

5. Make an offer.

Once you've researched the property you'd like to purchase, you can begin the offer process.

1. Determine your offer price: Based on your evaluation of the property's value and your budget, decide on an initial offer price. Keep in mind that this price should be competitive but also leave room for negotiation.
2. Prepare a letter of intent (LOI): Draft a Letter of Intent outlining your proposed terms and conditions. The LOI should include the offer price, payment terms, due diligence period, and any contingencies such as financing or inspection results.
3. Submit the LOI: Present the Letter of Intent to the seller through your real estate agent or broker. This document serves as a formal expression of your interest and opens the door for negotiations.
4. Negotiate terms: Be prepared to negotiate with the seller. This may involve several rounds of counteroffers until both parties agree on the final terms. Your real estate agent or broker can be invaluable in guiding you through this process.
5. Draft the purchase agreement: Once both parties agree to the terms, have your attorney draft a formal purchase agreement. This legal document will outline all the specific details of the transaction, including contingencies, closing date, and any special conditions.
6. Due diligence period: After the offer is accepted, you'll enter the due diligence period. During this time, conduct thorough inspections, review financial records, verify zoning laws, and ensure there are no hidden issues with the property. This period allows you to confirm that the property meets your expectations before finalizing the purchase.
7. Secure financing: Work with your commercial lender or mortgage broker to finalize your financing arrangements. Ensure all necessary documents and approvals are in place to secure the loan.
8. Close the deal: If everything checks out during the due diligence period and your financing is secured, proceed to the closing. This stage involves signing all required documents, transferring funds, and obtaining the keys to the property.

Ready to start looking into financing for a commercial property? Learn more about commercial mortgages.

As a small business owner, you’re probably familiar with at least a few of the many loan products available. Many lenders require you to offer an asset to secure a debt. As time goes by, you might find yourself securing multiple loans with the same asset—a process called cross-collateralization.

Cross-collateralization is fairly common—“second mortgages” are a popular form of cross-collateralization, for example. There can be many benefits to taking advantage of cross-collateralization, but this process also increases the risk of losing assets, so it’s important to understand how cross-collateralization works before making any formal arrangement.

What to know about collateral.

There are two main types of loans: secured loans and unsecured loans. These loans differ in regard to collateral requirements. Collateral is an asset that a borrower offers up as a way to guarantee the amount of a loan. Common forms of collateral include cash deposits, real estate, or vehicles.

Secured loans require collateral, while unsecured loans do not. If you default on secured loans, the lender can seize the collateral as repayment for the loan amount. Lenders of unsecured loans, like credit cards, have no such recourse, but this usually causes the repayment terms of unsecured loans to be less favorable for the borrower.     

In many cases, a lender uses an asset to secure the loan for that very asset. This is common with home mortgages, car loans, and equipment financing. If you have a mortgage, your house is the collateral—so if you default on your mortgage, the lender can then collect the collateral and repossess your house.

What is cross-collateralization?

Cross collateralization refers to a situation where multiple loans are secured with the same asset.

In a second mortgage situation, your home serves as collateral for a mortgage. As you pay down your mortgage, you own more of your home. You can then use your home as collateral for a second loan, i.e., a second mortgage.

Cross collateralization also occurs if different types of financing are secured with the same asset. If you’re paying off a car loan, the car becomes collateral for this loan. If you use the car as collateral for another type of financing, like a credit card, this is cross-collateralization.

“Cross-collateral refers to a method that lenders use to utilize the collateral of a loan such as a car to secure a second loan that an individual may have with the lender,” explains Jason Gordon at The Business Professor. “When an asset is cross-collateralized, it brings up issues as to which secured party has priority to the asset in the event of default.”

Less commonly, cross-collateralization also refers to a situation when a lender requires multiple forms of collateral for a single loan.

How cross-collateralization works.

Understanding the workings of cross-collateralization is crucial for any business owner considering this route. Essentially, this process ties the value and security of one or more loans to the same collateral. This is advantageous in situations where you may not have enough separate assets to secure multiple loans. For example, if you have equity in your property, you can leverage it to secure not just a primary mortgage but also a business loan or line of credit.

When you enter into a cross-collateralization agreement, it's like you're giving the lender a broader safety net. In the event of a default on any of the loans secured by the same asset, the lender has the right to seize and sell that asset to cover your debt. This means the stakes are higher for you because failing to repay one loan could jeopardize the asset tied to all the loans.

One critical aspect to monitor with cross-collateralized loans is the loan-to-value (LTV) ratio. This ratio measures the loan amount against the value of the collateral securing it. A higher LTV ratio indicates more borrowing against the asset, which can be risky if the market value of the collateral decreases.

For businesses, cross-collateralization can open doors to additional funding that might not be available otherwise. However, it compounds the risk to your assets. Therefore, it's wise to carefully assess your financial stability and the implications of tying multiple debts to vital assets before proceeding with such arrangements.

Benefits and risks of cross-collateralization.

Cross-collateralization can be a double-edged sword for savvy business owners, meshing intriguing benefits with profound risks. It's like stepping into a strategic game where your assets are on the line, offering a chance to secure more funding while posing a significant risk if the tides turn. In this section, we'll unravel the perks and perils of cross-collateralization, aiming to provide a balanced view that helps you weigh its worthiness against your business strategy.

Benefits

• Increased loan access: Cross-collateralization can significantly enhance your borrowing power. By leveraging the same asset for multiple loans, businesses can access higher loan amounts or more favorable terms than might be available with unsecured financing.
• Flexibility in financing: This strategy offers flexibility, allowing businesses to tap into the equity of their assets, such as real estate or vehicles, for various financial needs, from expanding operations to covering unexpected expenses.
• Potential for better rates: Often, loans that are secured by collateral have lower interest rates compared to unsecured loans. Cross-collateralization might help negotiate lower rates due to the added security it provides lenders.

Risks

• Increased loss risk: The primary risk of cross-collateralization is the potential loss of valuable assets. If a business cannot meet its loan obligations, the asset securing multiple loans could be seized, having a more significant impact than defaulting on a single secured loan.
• Complexity in managing loans: Juggling multiple loans tied to the same collateral can lead to intricate financial management challenges. Keeping track of various terms, interest rates, and repayment schedules requires diligent oversight.
• Difficulty in switching lenders: Once an asset is cross-collateralized, it may be more challenging to refinance or obtain new loans with different lenders. The existing cross-collateral agreements might limit flexibility and negotiation power with potential lenders.

What is a cross-collateral loan?

A cross-collateral loan essentially links the collateral of multiple loans together. This means if you've borrowed money to purchase a car and later decide to take out a personal loan, the same car can act as the collateral for both loans if both are through the same lender. This strategy can be particularly appealing for borrowers looking to maximize their borrowing capacity without having to find new assets to secure each loan. 

However, it's essential to understand that cross-collateralizing your loans binds them together in a way that can complicate future financial moves. For instance, if you wanted to sell the car that's serving as collateral for your loans, you'd need to pay off or substantially pay down the debts to remove the lender's claim on your asset. This intertwining of debts and assets makes managing your finances a bit more complex but can be a powerful tool in the right circumstances.

Is cross-collateralization legal?

Cross-collateralization is legal and fairly common, but a lender is required to inform you that cross-collateralization is occurring.

If you take out multiple secured loans from the same lender, like a bank, it might use the same collateral, making your assets cross-collateralized. You must legally consent to this, but do your due diligence in reading over any loan agreement. Be especially aware of “dragnet clauses” where a lender can pursue your asset if you used it for collateral for any loan with the lender.“

Lenders cannot use your business’s property as collateral without your consent,” writes Shawn Grimsley in the Houston Chronicle. “Lenders obtain your consent to cross-collateralization through a dragnet clause, which may allow the lender to use the collateral for any loans or other obligations your business may owe the lender.”

Is cross-collateralization bad?

If you can make your loan repayments on time, you’ll probably have no issues with cross-collateralization. Trouble arises if you default, however. If an asset is cross-collateralized and you default on one of your loans, you will default on all of your loans, because the asset can no longer secure any of them.

Can banks cross-collateralize?

Banks cross-collateralize often, but cross-collateralization is even more common with credit unions. Cross-collateralization is especially conventional when you seek multiple loans from a single lender. With every loan you take out, read over the agreement and make sure you consent to how a loan is secured.

How do I get out of cross-collateralization?

The best way to untangle yourself from a bad cross-collateralization situation is to contact the lender and attempt to renegotiate your loan. You might, for example, be able to secure the remaining debt with other collateral, although the repayment terms might be worse.

Bad cross-collateralization situations usually end with the loss of the asset, even if you declare bankruptcy. Unfortunately, besides repayment, the only way to get out of cross-collateralization is by letting your lenders repossess the collateral.

Alternatives to a cross-collateral loan.

Exploring alternatives to a cross-collateral loan is important for any business owner seeking flexibility and minimal risk in financing options. One such alternative is seeking out unsecured loans. Although typically bearing higher interest rates due to the increased risk for the lender, unsecured loans do not tie down your assets, providing peace of mind and simpler asset management.

Another option could be asset-based lending, which focuses on the value of specific assets rather than intertwining them across loans. This method allows for targeted borrowing against inventory, receivables, or other business assets without cross-collateralization complications.

Crowdfunding or peer-to-peer lending platforms also present innovative financing avenues. These methods can offer more favorable terms and the opportunity to avoid traditional banking systems and their associated risks and constraints. Each alternative has its unique set of benefits and considerations, gearing towards providing a tailored solution that aligns with your business's financial strategy and growth objectives.

Navigating the complexities of cross-collateralization requires a delicate balance between leveraging your assets for financial gain and protecting them from undue risk. Whether you're a seasoned business owner or new to the entrepreneurial scene, understanding the intricacies of secured loans, including cross-collateral loans, is crucial.

By weighing the benefits against the potential drawbacks and considering viable alternatives, you can make informed decisions that align with your financial goals and risk tolerance. Remember, the key to successful financial management lies not only in securing the necessary funds but also in maintaining control over your assets and their future.

You may have decided to buy an existing business after it popped up on your radar. But more likely, you’ll have to look for a business that is for sale.

You can find businesses for sale via:

• Business brokers
• Networks and small business associations
• Your current employer
• Directory listings
• Advertisements

1. Hire a business broker.

A business broker is similar to a real estate agent. They know the ins and outs of which businesses are for sale (including which are a steal versus a money pit) and understand the nuances of specific industries. The broker will also help you throughout the negotiation process.

You may have to use a business broker with certain sellers who use intermediaries to protect their identity. Business owners sometimes keep their “for sale” activity secret to avoid provoking anxiety in suppliers, customers, and employees.

What to look for in a business broker.

Choosing the right business broker is crucial for a smooth transaction. Consider these key attributes:

• Experience and Industry Expertise: A broker with a solid track record in your business sector will better understand market conditions and potential pitfalls.
• Certifications and Professional Affiliations: Look for membership in the International Business Brokers Association (IBBA) or similar organizations to ensure professionalism.
• Reputation and Client Testimonials: Research reviews and ask for references to gauge client satisfaction and success stories.
• Network and Reach: A well-connected broker with extensive industry contacts can offer more opportunities and access to potential buyers or sellers.
• Fees and Contract Terms: Discuss upfront to ensure there are no hidden charges and both parties are clear on expectations and deliverables.

You’ll pay a fee to use a business broker, but it can be worth it to avoid surprises during the purchase process.

How to find a small business broker.

Places to find a small business broker include:

• Business broker associations
• Your professional network
• Ask other for-sale businesses

Business Broker Associations

Business brokers are like the rest of us. They often belong to professional organizations to stay current with industry trends, boost their visibility, and increase networking opportunities. Most business broker associations list their members on their websites.

Two well-known business brokers’ associations to review are:

• International Business Brokers Association (IBBA)
• National Association of Business Brokers (NABB)

Your network

Your professional network, including your attorney, accountant, or business peers, may be able to recommend a business broker. Don’t forget to check with your local SCORE chapter or small business development centers.

Ask for recommendations from for-sale businesses.

Do you know a business for sale that you aren’t targeting for purchase? Ask them if they are using a business broker that they’d recommend.

2. Ask your network.

This is the perfect time to tap into your professional network and small business associations. Often, they know what companies are on the market or are open to a conversation about selling.

Using your network to find businesses for sale offers several significant advantages. Firstly, there’s an inherent level of trust and credibility because you're often dealing with established relationships. This trust can streamline negotiations and provide access to information that might not be publicly available.

Secondly, your network can offer deeper insights and firsthand experiences about potential businesses, helping you make a more informed decision.

Additionally, leveraging your network can lead to more discreet inquiries, which is crucial in preserving confidentiality during your search. Finally, using your network can save both time and resources by tapping into a pool of pre-vetted opportunities, compared to cold-search methods.

3. Check with your employer.

Depending on your employment situation, perhaps you could buy your current employer’s business. You don’t want to appear to be staging a takeover, so start the conversation by asking what their succession plan is. That could lead to deeper discussion, including your interest in purchasing the business.

4. Explore directory listings.

Internet searches and directory listings such as BizBuySell.com, Bizquest.com, and LoopNet.com are also great sources for finding businesses for sale. 

These sites allow you to filter your search by location, industry, and business size. They also provide detailed information on the business’s financials, such as revenue and cash flow. However, keep in mind that many of these directories charge a fee for listing businesses for sale, so not all companies may be represented.

5. Look for advertisements.

Finally, don’t overlook traditional methods like newspaper or online ads. Local publications often feature businesses for sale in their classifieds section.

A business owner planning a DIY sale may accept a lower purchase price since business broker fees will be eliminated. Finding the best small business to buy takes time but will pay off in dividends down the road. When you are ready to take the leap, remember that Lendio can walk you through the steps to secure a business acquisition loan.