Every Way to Get Small Business Loans in 2024 [startups & new businesses included]

hey everyone quran here from life accounting where we help you save on taxes and increase your wealth and by the end of this video you will know every business loan type available to you as a small business i'll be covering loan eligibility needed documents and how to compare loans so you get the best terms let's dive in [Music] okay so there are many reasons why you may be interested in getting a loan for your business to start the business for working capital for cash flow for equipment for emergencies the list goes on and on so let's start by understanding the types of lenders and loans available to you the age of your business the revenues of your business and how fast you need the cash will influence which lender and type of loan will be the best for your business there are three main types of lenders for a small business loan first there is the sba the small business administration offers different types of loans for small businesses and the biggest benefit of an sba loan is that the sba partners with lenders to provide loans and guarantees 75 to 90 percent of the loan for the lender this results in better terms and easier qualifications for small businesses now the downside of a business loan from the sba comes in the form of increased paperwork and approval speeds that can be slower than other lenders which makes an sba loan best for any business that can weather the time it takes to get approved next you have conventional banks these are the regular everyday banks that provide loans to businesses think bank of america or chase bank now conventional bank loans generally have the best terms regarding interest rates and fees when it comes to small business loans but the biggest downside of a business loan from a conventional bank is how difficult it is to qualify and get approved especially for new businesses so a loan from a conventional bank is best for established businesses with consistent revenues all right next we have alternative lenders these will be your online lenders of capital for businesses so what are the benefits of an alternative lender or online lender well loan approvals typically take less than a few hours and funds are provided in less than a week alternative lenders also have the easiest eligibility requirements and less rules for the use of the funds which brings us to the downside of using alternative or online lenders to make up for how quick you can get approved and funded they typically offer the highest interest rates and fees compared to other types of lenders but because it's so easy to get funding alternative lenders are best for startups or business owners without high revenues and popular alternative lenders include cabbage funding circle blue vine on deck or fun box okay so we went over the lenders now let's talk about the types of loans you can get for your small business first bank loans these are loans provided by conventional banks and the benefit is that they typically have the best interest rates out of all loan options but the downside is strict qualifications needed to qualify you'll need great credit in an established business so loans from conventional banks are best for established businesses with good credit and these are going to be your popular lenders once again like bank of america chase or wells fargo then we have sba loans and i first want to talk about the 7a loan which is a loan program backed by the sba for up to 5 million dollars in terms up to 25 years now the biggest benefit is that there are over six different loan programs to fit your needs but the downside is that to qualify you need at least a 690 credit score two years in business and consistent revenues so once again this loan is best for established businesses with good credit who don't need funds quickly next we have micro loans that are very accessible for businesses without large revenues or good credit the downside is that the process can take a few weeks a business plan is needed and collateral against the loan is required as well as a personal guarantee so this is best for startups or small businesses who have bad or no credit history the next type of loan from the sba is a 504 loan and these are loans up to 5.5 million dollars for the purchase of commercial real estate land and equipment with terms up to 25 years now the biggest benefit of these loans is the relatively low interest rates and small down payment of only 10 percent but here's the downside it's a lengthy process with involvement from both a bank and an sba approved certified development company also known as a cdc so this is best for established businesses who need to purchase equipment or buy real estate now the next type of loan you can get is called a term loan which is a lump sum paid back in fixed increments over time the biggest benefit is that it's fast has online approval and fund disbursement with the consistent payment schedule the downside is that interest rates and fees are typically higher than conventional bank loans or sba loan so this type of loan is best for startups or business owners with not so great credit and popular lenders include cabbage funding circle blue vine on deck and fun box then there's the line of credit which is the fixed and flexible revolving access to cash up to your limit the benefit is that interest is paid only on the amount drawn and once you pay it back the funds are immediately available for use again the downside is that fees can be costly and borrowing amounts can be lower than with a loan so this is the best for all businesses who can qualify and popular lenders of a credit line includes cabbage blue vine and fundation our next type of loan is called invoice financing which is a cash advance typically 50 to 90 percent on unpaid invoices it's actually not alone but the biggest benefit is that it's easier to qualify for than other loan options due to the invoices being collateral the downside is that fees can be greater than other loan options and funds are dependent on your sales continuing so this is best for businesses with consistent sales and popular lenders include blue vine and fun box then there's the merchant cash advance which is a cash advance on unpaid credit card sales the benefit bad credit or minimal business history can still qualify the downside is that this is the most expensive form of financing available so it's best for businesses who have exhausted all other loan options and popular lenders include rapid finance can capital and even paypal then there's equipment financing which is loaned specifically for purchasing equipment the benefit low interest rates fixed monthly payments and leases may be available for the equipment the downside is that funds are limited to only purchasing equipment so this is best for businesses who need equipment and don't want to purchase upfront popular lenders include crest capital balboa capital and currency finance now let's talk about secured versus unsecured business loans no matter what lender or type of loan you decide to go with the loan will either be a secure loan or an unsecured loan secured loans use assets as collateral or recourse in case you default on the loan collateral provides some form of protection for the lender and generally results in better loan terms and common types of collateral include real estate equipment cash cars outstanding invoices and payments and even future revenue the amount of collateral needed will vary depending on the lender the type of loan in the loan amount unsecured loans do not require collateral and are therefore more risky for the lender the higher risk typically results in stricter requirements and or higher interest rates now you can't just walk into a bank and get a loan you'll need a few documents first and no matter what type of loan you apply for or what type of lender you go with here are the documents that you may need to provide tax returns this is going to be personal income tax returns along with business returns if applicable this may also include k-1 statements for partnerships or an s-corporation shareholders next up you have income statements and balance sheets which are financial documents that provide a snapshot into the business performance assets and liabilities then you're going to need business and personal bank statements you're going to need business legal documents also which are business certificate licenses and contracts if they apply and lastly a business plan all right let's talk about loan eligibility each lender and loan type will have their own specific requirements but most take into account the four c's the first c is capital your ability to repay by looking at your business and our personal earnings savings and debt then there's credit which is the credit history of your business and or you personally next we have collateral which are assets that can be used to secure the loan if it is a secure loan and lastly conditions which is the purpose of the loan time in business and industry of the business okay so you understand the types of loans and what you need to get a loan now let's talk about how to compare lenders okay assuming you qualify when comparing two or more loan options against one another look at the following items to determine if it is the best option for you before signing the dotted line so first look at the interest rate in apr interest rate is the annual cost of the loan as a percentage apr is the annual cost of the loan plus any fees next ask yourself is the interest rate fixed or variable look for additional fees like application fees origination fees servicing or process fees non-sufficient fund fees closing costs prepayment fees late payment fees administrative fees just look for the fees both hidden and not hidden next taking to consideration the fund amount what is the max amount allowed to borrow next look at the repayment terms how long will you have to repay the loan how often do you have to make payments is there a balloon payment how much is the monthly payment what collateral is needed is the loan secured or unsecured and if it's unsecured what collateral is needed okay let's look at a loan comparison example notice how loan b has lower monthly payments in a longer term though it results in a larger amount of interest paid over time so don't be fooled once again look at the loan amount the apr loan terms monthly payments interest paid and also fees i'm going to place a few videos on the screen i think you should watch next be sure to check them out also if you found this video helpful do me a favor and hit the like button for me it helps others to find this video on youtube and subscribe to the channel for more information that helps you save on taxes and increase your wealth i'm quran from life accounting and i'll see you in the next video

Channel: LYFE Accounting

Views: 196,751

Keywords: small business loans, small business loans 2022, where to find small business loans, where to get small business loans, loans for small business, business loans for new business, business loans 2022, business loans for startups, business loans

Id: yYB-_9GEpUg

Length: 12min 44sec (764 seconds)

Published: Fri Feb 18 2022