Starting, maintaining, and growing a business requires a steady source of funds. Bank loans are one choice for fulfilling your business finance needs, but other options exist.
Understanding your choices will help you identify the right business loan for your needs.
When Do You Need the Funds?
Securing a business loan from a bank typically takes somewhere between 30 and 60 days, although this time frame varies by the financial institution. If you’re applying for an SBA (U.S. Small Business Administration) loan, you should plan to wait anywhere from 60 to 90 days. Neither option is going to suit you if you need fast funds. Prompt action is often essential when taking advantage of a prime business opportunity. When you can’t afford to let that chance pass you by, you need to pursue a different form of funding.
Working with an online lender like First Capital Business Finance can help you quickly obtain funds. Our team can give you access to your funds in as little as five business days. We have in-house underwriters that expedite the loan approval process and various loan programs so you can pursue the ideal option for your company’s needs.
What Is Your Personal Credit Score?
Your credit score plays a significant role in the loan approval process. If you have a good credit score, you’ll have more loan options and enjoy lower interest rates. Banks usually require a minimum score of 650 to qualify for a business loan. SBA loans are even stricter, requiring a credit score of 720 or higher.
If you have a fair or poor credit score, you’ll find many loan options closed to you. However, private lending companies have more flexibility. For example, our business loans require a credit score of only 480. We place a higher priority on your company’s historical gross income. You can access funding through our programs despite your current credit situation if you have a solid business.
What Income Documentation Can You Provide?
You’ll need to provide as many as three years of tax returns for some bank loans. Any owner with more than a 20% stake in the business must also submit personal financial documents. Gathering the necessary paperwork can be as time-consuming as securing the loan. You want to find the most straightforward route when you need funds quickly.
With a private lending company like First Capital Business Finance, you can secure a loan with much less documentation. We require only six months of bank statements for our loan applications. We also need four months of merchant processing statements if you process credit cards.
How Much Money Do You Need to Borrow?
The amount you need to borrow can be a barrier to securing an adequate business loan for your needs. A bank will require that you have four times the loan amount in liquid assets. Therefore, if you need $100,000, you must have $400,000 in liquid assets to secure an adequate loan from a bank.
We do not have any requirements concerning your liquid assets. We base your loan on 10% of your annual gross revenue.
How Quickly Can You Pay Back Your Loan?
If you’re looking for a long-term business loan, you can get it from your bank. Banks can provide you with a loan term from three years to 20 years. While these loans will result in lower monthly payments, they’ll keep you in debt much longer if you proceed with these loans.
If you’re looking for a short-term funding solution, we can give you a loan that’s just three to 18 months. Once you’ve paid down at least 70% of your loan, you become eligible for renewal if you need to borrow additional funds. This arrangement is an appealing way to keep your business out of debt as much as possible while securing the money you need for your business.