Banks, credit unions, non-bank lenders, and governments offer small business loans. Borrowers can choose from different financial solutions such as commercial and business term loans, cash flow finance, business loans and lines of credit, and others.
Applicants for business funding can choose from disaster and real estate loans, micro-loans, and others. Banks also offer professional, franchise start-up, and commercial real estate loans. Secured and unsecured loans differ when it comes to interest rates, repayment periods, and collateral. Banks that offer secured loans require that applicants pledge some asset as collateral, for example, inventory, marketable securities, and equipment and machinery. Businesses are also offered unsecured loans with flexible repayment terms. Businesses are offered land and subdivision development, equipment and vehicle, and other loans. Borrowers who opt for equipment and vehicle loans can use the funds to purchase machinery, trucks, vans, and so on. Long-term loans are also offered to finance the purchase of real estate, rental estate, equipment, industrial plants, and facilities. Other options are permanent, interim, and income-producing financing. Banks provide micro-loans to young businesses and start-ups. The money can be used for the purchase of machinery and equipment, furniture, supplies, and so on. The loan cannot be used to buy real estate holdings and land. Funding is also available in the form of short-term loans with a borrowing limit of up to $35,000. In addition, there are small business loans under different government programs that come with attractive interest rates.
Banks require documents such as licenses and business certificates, loan application forms, and others. You may need to submit your profit and loss statements and current balance sheets. One of the requirements is to prepare your financial documents and statements and make them available for a review. Bring your cash flow statements, corporate resolution, and proof of non-business income. Banks are also interested in your business profile – length of time in business, history, number of employees, sales volume, etc. Legal documents to submit include commercial leases, franchise agreements, and others. Some banks also require that applicants submit copies of contracts and business registrations. Make sure you write a solid business plan to increase your chances of getting approved.
Additional Sources of Financing
Financial institutions and non-bank lenders offer different types of loans, including revolving check credits and line of credit loans. New business owners can choose from bank and buyer financing. Business acquisition loans help companies to purchase existing businesses.