Tag: Loan

How to Qualify for a Small-Business Loan in 5 Steps #business #listing

#sba loan requirements

#

Credit Cards

Banking

Investing

Mortgages

Loans

Insurance

Credit Cards

Banking

Investing

Mortgages

Loans

Insurance

How to Qualify for a Small-Business Loan in 5 Steps

You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved. Here’s how we make money .

Qualifying for a small-business loan is easier when you’re prepared. Below is a to-do list that will help you qualify for the cash you need to grow your business.

Whether you end up applying for an SBA loan through a bank or opt for an online small-business loan, you should be familiar with the requirements of each lender. Knowing whether you meet their criteria before you apply will save you time and frustration.

How to quality for a small-business loan

1. Improve personal and business credit scores

Your personal credit score ranges from 300 to 850 (the higher, the better), and evaluates your ability to repay debts. The score is typically weighed more heavily by small-business lenders if your business is new and lacks credit history. It’s based mainly on three factors: your payment history (35% of your score), the amounts owed on credit cards and other debt (30%) and how long you’ve had credit (15%).

Paying your bills on time is, of course, crucial to improving your score. But even if you pay your bills like clockwork, credit report errors could be damaging your score one in four consumers has damaging credit report errors. However, four out of five consumers who filed a dispute got their credit report modified, according to a study by the Federal Trade Commission. You can get a copy of your credit reports for free once a year at AnnualCreditReport.com and dispute any inaccuracies you find through each of the credit bureaus’ websites (Experian, Equifax and TransUnion).

Businesses that are more established and applying for bank loans can check out their business credit scores (which generally range from 0 to 100) at the three business credit bureaus: Experian, Equifax and Dun Bradstreet. Check out these five steps to building business credit, and if you see any mistakes on your reports, contact the bureaus.

More than likely, you’ll need an excellent business credit score as well as good personal credit to qualify for an SBA loan or traditional loan from a bank, although this will depend on the individual lender and factors such as your business revenue and cash flow. In general, online lenders look at personal credit scores but are a bit more lenient when it comes to credit score requirements, as they place more emphasis on your business’s cash flow and track record.

2. Know the lender’s minimum qualifications

There’s no way around it: If you don’t meet a lender’s minimum qualifications, applying is a waste of time.

Borrowers typically need to meet minimum criteria related to credit scores, annual revenue and years in business. And lenders generally frown upon recent bankruptcies and other past delinquencies.

To qualify for SBA loans, borrowers also must be current on all government loans and can’t have any past defaults. So if you’re late on a federal student loan or a government-backed mortgage, you’ll be disqualified. You also can’t be on the SBA’s ineligible businesses list. which includes life insurance companies and financial businesses such as banks.

Qualifying for online lenders can be easier. While these lenders typically underwrite loans based on traditional factors such as credit scores, annual revenue and cash flow, the loans carry less stringent requirements than banks.

3. Gather financial and legal documents

Banks and other traditional lenders typically ask for a wide range of financial and legal documents during the application process. They include:

  • Personal and business income tax returns
  • Balance sheet and income statement
  • Personal and business bank statements
  • A photo of your driver’s license
  • Commercial leases
  • Business licenses
  • Articles of incorporation
  • A resume
  • Financial projections if you have a limited operating history

These requirements can make getting a bank loan time consuming. That may not be an issue if you’re in the market for a long-term business loan to finance a major investment.

However, if you need money faster, online lenders may be a better fit, as they can provide a streamlined online application process with fewer documentation requirements and faster underwriting. But they may come with higher borrowing costs. If you have good credit and business finances, however, some lenders may provide rates comparable to those of bank loans.

4. Develop a strong business plan

Lenders will want to know how you plan to use the money and will want to see that you have a strong ability to repay. They may require a solid business plan that details the purpose of the loan and how you expect it to increase profits.

Your business plan should include current and projected financials, and clearly demonstrate that your business will have enough cash flow to cover ongoing business expenses and the new loan payments. This can give the lender more confidence in your business, increasing your chances at loan approval. Your p lan should include :

  • Company description
  • Product and/or service description
  • Management team
  • Industry analysis
  • Facilities and operations plan
  • Promotional, marketing and sales strategy
  • SWOT analysis (strengths, weaknesses, opportunities, threats)

5. Provide collateral

To qualify for a small-business loan, you may have to provide collateral to back the loan. This refers to an asset, such as equipment, real estate or inventory, that can be seized and sold by the lender if you can’t make your payments. It’s basically a way lenders can make back their money if your business fails.

SBA loans require “adequate” collateral for security on all loans, plus a personal guarantee from every owner of 20% or more of the business. A personal guarantee puts your credit score and your personal assets on the hook.

Some online lenders do not require collateral but may want a personal guarantee. Others may also take a blanket lien on your business assets essentially another form of collateral giving the lender the right to take business assets (real estate, inventory, equipment) to recoup an unpaid loan. Each individual lender has its own requirements, so don’t be afraid to ask questions if you are unsure.

If you don’t have collateral to get a loan or don’t want to take on the risk of losing personal or business assets, unsecured business loans may be a better option.

Find and compare small-business loans

If you’re looking for financing, NerdWallet has created a comparison tool list of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.

This post was updated. The post was originally published on Dec. 1, 2015.

Image via iStock.

You may also like

Lender reviews

See how different lenders stack up in NerdWallet’s expert reviews

We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines. and avoid disclosing personal or sensitive information such as bank account or phone numbers. Any comments posted under NerdWallet’s official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.

2016 NerdWallet, Inc. All Rights Reserved

Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.

Additionally, this site may be compensated through third party advertisers. However, the results of our comparison tools, blog content and editorial reviews are based on objective analysis. For more information, please see our Advertiser Disclosure .





Tags : , , , , , , , , ,

How to get a business loan, options & requirements #stock #prices

#getting a business loan

#

Apply for a business loan

On this page

  • Choosing a loan you need
  • Improve your loan approval chances
  • Risk assessment

How to get a business loan

When applying for a business loan, it’s essential to prepare a detailed business plan and fully inform the lender about your proposed venture. This information helps the lender to provide you with the right type of finance and advice.

Decisions to make

Deciding that your business needs a loan is only the first step. There are a number of things to consider before you approach a lender; how much do you need to borrow; what type of loan will you need; how long will you need it for; can the business afford to repay the loan, interest and any one-off or ongoing fees that come with the loan; what security can you offer the lender and how this affects the interest rate offered.

Find and compare loan options for your business with the Infochoice Small business loan tool.

Online repayment calculators are a good tool in researching options but make sure you take the following into account:

Access to funds you borrow

If you need to access the funds on a semi regular basis (i.e. to help with cash flow to keep the business operating while waiting for your customers to pay for goods etc.), ‘at call’ loans such as an overdraft or line of credit are designed for this purpose. However, if you need the funds to buy a new business or equipment etc. to expand your existing business you will need the funds ‘upfront’. This is also known as a ‘fully drawn advance’ and provides you with the entire loan amount all at once.

Loan terms

Loans provided upfront will need a portion of the loan plus interest paid back at regular intervals. The repayment amount will depend on the term or length of the loan. To determine the loan term suitable for your business you will need to calculate how much you can afford to service the loan. Be aware that the longer the loan term the more total interest you will pay. Loans that are at call have no fixed terms.

Ongoing funding

This is the average amount of an overdraft or line of credit that is used at any one time. E.g. You may wish to have an overdraft limit of $20,000 to provide money for the occasional big expense, but usually you won’t use more than $5000 of that credit limit on average. So in this case $5,000 is the level of ongoing funding you need.

When applying for an overdraft limit, things to watch out for are:

  • higher the overdraft amount higher the fees
  • clauses where the lender can demand repayment of the whole loan at any time.

Fixed or variable interest rate

The choice of rate will affect the stability of repayments, overall cost of the loan and the loan features available. With a fixed rate loan the lender bears the risk of interest rate moves, while with a variable rate you will bear this risk. Ultimately, the choice of variable or fixed rates will depend upon how much free cash flow your business generates after you have paid all your expenses, including loan repayments. If your business has a low profit level, a variable rate loan repayment may rise beyond your ability to pay.

Loan security

Loans can be secured or unsecured by various types of assets, including residential, commercial, rural property or business assets. Alternatively, some loans are unsecured by any asset. Generally the less you provide for security the higher the interest rate will be. Be aware the lender has the legal right to seize any property or asset you offer as security if you can’t repay a loan on time.

Fees

There can be fees which can make a loan less attractive than it first seems. These include one-off fees such as establishment/application fees, exit/discharge fees and early termination fees or regular fees such as service fees or line/credit advance fees. The Business Loan Finder tool includes the cost of set-up and ongoing fees in the average monthly repayment to give you a better idea of the true cost of the loan.

Seek advice

The information provided here will provide you with a range of possible finance options. It is important to seek advice from your accountant or business advisers before approaching a lender for a loan.

Tip: Use our below Cashflow forecasting template to plan your cash flow and work out how much you need to lend.

Plan the business, plan the finance

Lenders will ask for a lot of in-depth information about the financial history of the business. It’s also important for you to create a convincing and detailed business plan which should include a profit and loss budget and cash flow forecast. The information you use to build your business plan may also be needed by the lender to assess your project. This includes both the past and future plans for your business, the people working in it and the market itself.

The outcome of your application is strongly influenced by how well your proposal is researched and how well it is presented.

Risk assessment

Banks and other lenders will look at your businesses risk profile when considering your loan application. Understanding what lenders look for and what they consider risky will help you present your business in a favourable manner.

As a general rule, lenders look for:

  • the level and nature of your security (what you’re offering to give them if you can’t repay the loan)
  • your ability to make regular loan repayments (cash flow risk)
  • your ability to ultimately repay the debt (business risk), including any other debts you might already have.

You need to be able to assess the level of cash flow or business risk in your specific circumstances. A projection of the cash requirements of the business is most important to a lender, as it is the actual cash left after expenses that will repay the loan, not income. It also shows you are an effective manager.

A lender’s perception of risk

The following factors can influence your lender’s perception of risk. If a number of these areas apply to you and your business you may need to consider another source of finance.

  • start up businesses incorporate financial, business and management risk
  • lack of security
  • lack of business history
  • industry sector, factors will include levels of competition, barriers to entry, profitability profile and current economic conditions
  • highly seasonal businesses e.g. suimsuits, agriculture. You’ll need to demonstrate how you’ll deal with cash flow pressures in the off season
  • lack of planning, market knowledge and finance skills
  • poor credit history.

Watch out! Before entering into a payment arrangement with the Tax Office, businesses should discuss this with their current or future lenders. Many businesses are unaware that entering into a payment arrangement with the Tax Office or other government agencies may adversely affect their current and future financing arrangements. For instance, a lender may not lend to a business if it is currently in a payment arrangement.

For more details visit the Guide to managing your tax debt on the ATO website.

What’s next?

Handy tools





Tags : , , , , , ,

SBA Loan Rates – 504 and 7a Loan Rates #business #stationery

#sba loan rates

#

SBA 504 Loan Rate – 4.08% Effective Rate*

SBA 504 Rates for the August 2016

The 504 loan rate (effective rate) for 20 year commercial real estate loans is 4.08% * The effective rate is inclusive of all servicing fees. (Some lenders do not advertise the all inclusive rate, so you may see the rate advertised slightly lower in some areas of the country).

The 504 program consists of 2 loans:

  1. first mortgage for approx 50% of the project cost
  • 504 second mortgage guaranteed by the SBA (this is the rate referenced above).
  • SBA 7a Loan Rates

    SBA 7a rates can be either fixed or variable.

    The 25 year fixed rate is very competitive and never adjusts. These loans are available if the majority of the loan proceeds are used for commercial real estate. The underwriting can be a little tougher than for a variable rate, but this is a phenomenal opportunity to lock in great low rates for the long term if you qualify.

    Variable rates are typicallyPrime + a margin not to exceed 2.75% , The margin is set by the lender based on their cost of funds and the quality of the loan. Most lenders will offer something between Prime + 1.25% and Prime + 2.75%. 7a loans can also be based on the one month LIBOR rate.

    Please contact us at 1-800-414-5285 for more information about the possibility of a fixed rate

    10 Year Loans for Business Acquisitions

    The SBA 7a is also a great solution for business acquisitions as well as refinancing of business debt or partner buyouts and the rates can be fixed or variable for up to 10 years.

    504 Loan Rates


    First Mortgage Rates:
    Currently range from high 3% range to as much as 6.5% depending on loan size, term, property type and strength of transaction and are typically amortized for 20 to 25 years and in some cases as long as 30 years.

    First mortgage rates and terms will vary depending on the type and size of the loan with the 5 year fixed rate/25 year amortization being the most common. After the initial 5 years the loan could adjust as frequently as monthly or as infrequently as every 5 years depending on the lender.


    August 2016 504 Mortgage Rate: 4.08%*
    – fixed for 20 years.


    The combination of the 2 loans and the fact that the second mortgage is always permanently fixed make for very attractive 504 loan terms.

    SBA 504 Equipment Loans are typically 10 years and can be anywhere from .25 to 1.5% lower than commercial real estate transactions .

    SBA 504 Refinance Rates may be slightly higher and multi-purpose property rates are typically lower than single or special use properties like hotels or self storage properties.

    New Fixed Rate Option for 504 First Mortgage

    There is also a low rate SBA fixed rate option available for multi-use properties and some special use/single purpose properties for the first mortgage portion of the 504 program. The loan is fixed for the entire term of the 25 year first mortgage.


    The rates for this program are very competitive and when combined with the low rate second mortgage it makes for very attractive fully fixed long term rates.
    (The rate for the first mortgage will vary depending on loan size, prepayment penalty, etc).

    Again, this program is a true fixed rate that will never adjust . so while the rate may be higher than the 5 year fixed and other options, this loan is the better choice if you intend to own your property for the long haul.


    Please contact us for more information about this program: 1-800-414-5285

    504 Loan Payment Example

    Here is an example of loan amounts and payments for a $1.5 million transaction with 10% down and a 1st mortgage rate of 4.8%:

    Down Payment/Equity Injection. $150,000

    First Mortgage: $750,000

    Second Mortgage: $600,000

    The payments would be as follows:

    First Mortgage: $4384.43

    Second Mortgage: $3661.22

    Total of Payments. $8045.65

    The 504 offers a low monthly payment with the least cash out of pocket and it compares very favorably with most any other commercial loan program. It is available for purchase, refinance, construction or renovation of owner occupied (owner-user) commercial property.


    Please contact us at 1-800-414-5285 to find out how the SBA 504 or 7a could help your business.

    Please note: the SBA does not make loans directly and interest rates are set by the lenders who make the loans.

    * Rate includes fees to SBA, CDC and central servicing agent. (Rates change monthly).





    Tags : , , , , , ,

    Merchant Cash Advance vs Business Loan – Small Business Blog #grants #for #small #business

    #business cash advance

    #

    Merchant Cash Advance vs Business Loan

    When things are going great, businesses have the cash flow they need for success and growth. During lean times or tight transitions, though, your company may need to find a cash advance loan to keep the doors open or to successfully expand. Though a myriad of funding options exists, merchant cash advances and platform lending like that offered here at Kabbage.com are two of the most popular and advantageous options.

    The trick is understanding the difference between the two. Each has its own unique characteristics, and is more or less appropriate for a specific business need.

    Let’s start with definitions.

    What is a Merchant Cash Advance?

    A merchant cash advance gives a business up-front cash, and takes payments from the credit card receipts on a regular (often daily) basis according to an agreed-upon amount. If you’ve been in business for more than a year, you’ve almost certainly received at least one phone call offering you merchant advance funding.

    What is a Business Loan?

    A business loan also provides up-front cash, but is paid back in monthly installments. These are usually withdrawn directly from your operations account, but terms are flexible if another method works better for your business.

    For example, let’s say your company needed $1,000 for an advertising blitz in the month prior to your peak season. With that advertising in place, you would be positioned to lead the pack in your region for your industry. Without it, your competition would get the lion’s share of the business and the lost business would amount to far more than the $1,000 you would invest. But it’s been a year since the last peak season, and you don’t have the cash on hand. You need the cash, and like any smart business person you look at the two cash advance options for your business in detail.

    Merchant Cash Advance vs Business Loan

    Though it comes from the newer platform lending model. a Kabbage business loan is still legally a loan. This means it’s scrutinized by federal authorities and subject to limitations and enforcement. Merchant cash advances aren’t technically a loan because of how the payments are structured. This means they aren’t as regulated or carefully watched. This doesn’t automatically mean that merchant advance funding comes with abusive interest rates and contracts, but it does mean you should read and understand that contract as completely as possible.

    Merchant cash advance loans approve any business that shows a history of credit card receipts sufficient to pay the money back. This makes them attractive to companies with new or bruised credit histories. Kabbage loans look at data from a variety of sources, including social sharing indicators, your cash flow reports, traditional credit reporting and industry metrics. Armed with that information, Kabbage can grant credit to struggling companies (at a higher interest rate to justify the risk), but can give lower rates to those who have earned them.

    In this category, both means of lending are about equivalent. Kabbage loans deliver funds within 24 hours of approval. Most merchant cash advances work at the same speed – but not always. Ask about this if you go with merchant advance funding and need the money quickly.

    Merchant cash advances take a percentage of credit card sales until the loan is paid. Kabbage loans take 1/6 th of the loan plus interest each month for six months. If your company needs flexibility that matches performance, a merchant advance might be the better option. If you want reliable, predictable costs for the borrowed money, Kabbage loans serve those goals more effectively.

    For the first two months of a Kabbage loan, the interest rate is between 1 and 13 percent of the principal, based on the metrics gathered during the approval phase of the application. The rate then falls to 1 percent for the remaining six months of the loan. Merchant cash advance operations do not typically publish their interest rates. Independent analysis of a variety of merchant advance funding offers puts the average APR at more than 38 percent.

    Merchant cash advances often include set-up fees, processing fees and even payment fees that can as much as double the actual cost of the loan. Kabbage loans include no extra fees. They cost as much as the “price tag” says.

    Which is the better option? As with all business decisions, there’s no single good answer. Platform lending like Kabbage serves one set of business needs, while cash advance loans serve a different set. While we can’t give you a definite answer, we hope this has helped you identify the best questions. If not, watch this two minute video on Merchant Cash Advances vs Kabbage Business Loans for more information.

    If you have experience with merchant cash advances versus business loans, tell us a bit about it in the comments below. Help the Kabbage community benefit from your experiences.

    Jason Brick speaks internationally to small businesses after a fifteen-year career in managing companies for himself and others. His books include the best-selling Mastering the Business of Writing and upcoming Ownership Evolution. When not writing or speaking he enjoys martial arts, board games, cooking, travel and spoiling his wife and sons. He usually lives in Oregon, but is spending the year in Malaysia.

    Latest posts by Jason Brick (see all )

    You might also like these posts:

    Get the security of a business line of credit today

    Qualify for a line up to $100,000 in minutes

    Browse By Category

    Browse By Category

  • Contribute:

    Interested in guest blogging or have a pitch for the Kabbage blog editor?

    Quick Links

    Contact

    Refer a Business, Get $200

    Help your friends grow their small businesses and earn a gift gard! Find out more

    Kabbage is powered by the Kabbage Platform. Visit the website

    *Kabbage can approve you in minutes when we are able to automatically obtain your business data and instantly verify your bank account. In some situations errors may occur during the sign up process, or we may need to send micro-deposits to confirm your bank account for security purposes. If this is the case, it may take up to several days to provide you access to funding.

    2016 Kabbage Inc. All rights reserved. Kabbage is a registered trademark of Kabbage, Inc.
    All Kabbage business loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.
    Celtic Bank Privacy Policy





    Tags : , , , , , , , ,
  • Business Loan Rates #small #business #help

    #business loan rates

    #

    Alaska USA

    Business Loan Rates

    Copyright 2016

    Alaska USA and UltraBranch are registered trademarks of Alaska USA Federal Credit Union.

    Mortgage loans are provided by Alaska USA Federal Credit Union in Arizona. Mortgage loans are provided by Alaska USA Mortgage Company, LLC in Alaska, Washington and California. License #AK157293; Washington Consumer Loan Company License #CL-157293; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License #4131067.

    Insurance services offered through Alaska USA Insurance Brokers, LLC. Insurance products are provided by various carriers and are obligations of the issuing insurance company. They are not obligations of or deposits to Alaska USA Insurance Brokers, Alaska USA Federal Credit Union, or its subsidiaries, and are not insured by the National Credit Union Administration. Some products are not available in all states.

    Instructions

    • Enter your User ID
    • Click Log in to view your personalized keypad and enter your PAC.
    • Your initial User ID is your member account number, as printed in the top-right corner of your statement.

    Problems

    Learn more

    Secure your computer

    • Stay up-to-date on all operating system patches for your computer, phone, or tablet.
    • Use a current web browser, and install all updates.
    • Install anti-virus and anti-spyware software, and keep these programs updated.

    Protect yourself

    • Never share your Personal Access Code (PAC).
    • Review your account regularly and contact the Member Service Center if you have questions.
    • Remember Alaska USA will never call, email, or text its members to request confidential information.




    Tags : , ,

    Top 5 Small Business Loan Requirements – How to get a Small Business Loan

    #sba loan requirements

    #

    Top 5 Small Business Loan Requirements

    The time has come to expand your business with new employees, a larger location or a new product line. It’s an exciting time, but stressful because you’re not sure you have the cash reserves to manage the expansion.

    For many small businesses, this situation calls for a small business loan a cash infusion that pays for itself, plus the interest, with the new opportunities and extra income it allows you to create.

    Many of our Kabbage customers are new to small business lending. Though they’re familiar with personal loans, they only know the basics of small business loans and lines of credit. For those who “resemble that remark” and for more experienced folks who would like a review of how to get a small business loan here is your expert-researched, Kabbage-curated list of the top five small business loan requirements to get the best possible small business loan.

    #1: Strong Credit

    The bad news about small business lending is it can be hard to qualify for the best rates and deals. The good news is this decade has more options for good small business loans than any other time in history. You can choose between platform lending. traditional loans (like from a bank) and a variety of hybrid options available from local vendors or via the internet.

    This flexibility doesn’t mean your company shouldn’t look as good as possible on paper. Your FICO credit score will figure heavily in any lending decision, so (if time permits) spend time grooming that number in the months prior to applying. Research what other metrics the lenders you want use, and groom them as much as possible, too.

    If you have a major ding in your credit, like a repossession or string of late payments, be prepared to discuss them and why things will go better in the future.

    #2: Solid Business Plan

    Part of understanding how to get a small business loan is ensuring you have a solid business loan. You should have one of these anyway, since a strong business plan is a prerequisite for stellar business success. Traditional lenders will expect to see an updated, professionally prepared business plan as part of the lending process. Lacking one tells them you’re not ready for the “big leagues” and are a bad credit list.

    Though platform lenders like Kabbage won’t insist on seeing your formal business plan, similar documents about your social presence, industry statistics and unique market advantages all of which are part of a comprehensive business plan will go into decisions about what to lend you and how much it will cost.

    Either way, get a business plan together.

    #3: Compelling Personal Resume

    Traditional lenders want proof that the people responsible for running a business are qualified to do so, and part of that proof will be seeing the resumes for you and other principles like owners and executive officers. This resume should be as solid, well-edited and up-to-date as any resume you’ve ever sent out.

    Consider: the purpose of a resume is to get you the job you want. The purpose of this resume is to get you the job of running the company you want, instead of the company you have.

    Platform lenders don’t look at your traditional resume, but they will look at your business’ curriculum vitae in terms of performance metrics and social sharing. Take time to groom those items as substantially as you would a regular resume.

    #4: Bulletproofed P L Statements

    Like your business plan, you should have these anyway. You should be using your profit and loss statements as part of a robust monthly “vital signs” check for your business. If you’re not doing them, dig into your accounting software for half an hour. You’ll find a tool that compiles P Ls from your records. If you’re not using software to keep track of your financials get started on doing that.

    Lenders of all stripes are looking for three things in your P L: reliability, professionalism and ethicality.

    • Reliability – They want evidence that you will be able to make your promised payments, based on enough cash flow to cover the loan. If you don’t, the lender will assume that lending you money is too high a risk.
    • Professionalism – Lenders presented with incomplete, inaccurate or hastily prepared P L statements will assume that your business is similarly disorganized.
    • Ethicality – If you “fudge” your numbers to look better and get caught, you are done with that lender. The decision makers will assume that you cut ethical corners in other places.

    #5: Knowledge of the Loan Needed

    This is actually the first of the small business requirements that you should address, but we wanted to mention it last so it would be the freshest in your mind. Lending isn’t what it used to be – a situation where you went to a couple of banks, all of which offered the same basic products, and hoped they would agree to give you a loan.

    Modern small business lending includes a wide array of traditional, platform and peer-to-peer options with wildly varying qualification requirements and rates of interest. Before you start working in earnest on the other four requirements for your loan, decide what kind of loan you need. That way you won’t waste time and effort preparing the wrong documents.

    Do you have a tale of success or woe to share with the Kabbage community about when you aced a loan application or were embarrassingly unprepared? Share your story in the comments below.





    6 Smart Reasons to Get a Business Loan #stock #market #info

    #getting a business loan

    #

    6 Smart Reasons to Get a Business Loan

    Co-founder and CEO, Fundera

    November 9, 2015

    Spreading the word that you re considering a loan for your business can be met with all kinds of opinions. From general naysayers to cautionary anecdotes, everyone you meet will have a story as to what might happen if you take out a loan to start or expand your business venture.

    While it s true that not every reason is a good reason to go into debt for your business, that doesn t mean that good reasons don t exist. If your business is ready to take a leap, but you don t have the working capital to do so, here are six reasons you might re-consider applying for a small business loan .

    1. You re ready to expand your physical location.

    Your cubicles are busting at the seams, and your new assistant had to set up shop in the kitchen. Sounds like you ve outgrown your initial office location. Or maybe you run a restaurant or retail store, and you have more customers in and out than you can fit inside your space.

    This is great news! It likely means business is booming, and you re ready to expand. But just because your business is ready for expansion, doesn t mean you have the cash on hand to make it happen.

    In these cases, you may need a term loan to finance your big move. Whether it s adding an additional location or picking up and moving, the up-front cost and change in overhead will be significant.

    Before you commit, take steps to measure the potential change in revenue that could come from expanding your space. Could you cover your loan costs and still make a profit? Use a revenue forecast along with your existing balance sheet to see how the move would impact your bottom line. And if you re talking about a second retail location, research the area you want to set up shop to make sure it s a good fit for your target market.

    2. You re building credit for the future.

    If you re planning to apply for larger-scale financing for your business in the next few years, the case can be made for starting with a smaller, short-term loan in order to build your business credit.

    Young businesses can often have a hard time qualifying for larger loans if both the business and the owners don t have a strong credit history to report. Taking out a smaller loan and making regular on-time payments will build your business s credit for the future.

    This tactic may also help you build relationships with a specific lender, giving you a connection to go back to when you re ready for that bigger loan. Be careful here, though, and don t take on an early loan you can t afford. Even one late payment on your smaller loan could make your chances of qualifying for future funding even worse than if you d never applied for the small loan at all.

    3. You need equipment for your business.

    Purchasing equipment that can improve your business offering is typically a no brainer for financing. You need certain machinery, IT equipment or other tools to make your product or perform your service, and you need a loan to finance that equipment. Plus, if you take out equipment financing. the equipment itself can often serve as collateral for a loan — similarly to a car loan.

    Before you take out an equipment loan, make sure you re separating the actual needs from the nice-to-haves when it comes to your bottom line. Yes, your employees probably would love a margarita machine. But unless you happen to be running a Mexican Cantina, that particular equipment may not be your business s best investment.

    4. You want to purchase more inventory.

    Inventory is one of the biggest expenses for any business. Similar to equipment purchases, you need to keep up with the demand by replenishing your inventory with plentiful and high-quality options. This can prove difficult at times when you need to purchase large amounts of inventory before seeing a return on the investment.

    Especially if you have a seasonal business, there are times when you may need to purchase a large amount of inventory without the cash on hand to do so. Slow seasons precede holiday seasons or tourist seasons — necessitating a loan to purchase the inventory before making a profit off it.

    In order to measure whether this would be a wise financial move for your business, create a sales projection based on past years sales around that same time. Calculate the cost of the debt and compare that number to your total projected sales to determine whether taking an inventory loan is a wise financial move. Keep in mind that sales figures can vary widely from year to year, so be conservative and consider multiple years of sales figures in your projection.

    5. You ve found a business opportunity that outweighs the potential debt.

    Every now and then, an opportunity falls into your lap that is just too good to pass up — or so it seems, at least. Maybe you have a chance to order inventory in bulk at a discount, or you found a steal on an expanded retail space. In these instances, determining the return on investment of the opportunity requires weighing the cost of the loan versus the revenue you stand to generate through the available opportunity.

    Let s say for instance, you run a business where you get a commercial contract for $20,000. The trouble is, you don t have the equipment to complete the job. Purchasing the necessary equipment would cost you about $5,000. If you took out a two-year loan on the equipment, paying a total of $1,000 in interest, your profits would still be $14,000.

    If the potential return on investment outweighs the debt, go for it! But be careful with your calculations. More than one entrepreneur has been guilty of underestimating true costs or overestimating profits as a product of over-enthusiasm. When you re weighing the pros and cons, it often helps to perform a revenue forecast to make sure you re basing your decisions on hard numbers rather than gut instinct.

    6. Your business needs fresh talent.

    When working at a startup or small business, you wear a lot of hats. But there comes a time when doing the bookkeeping, fundraising, marketing and customer service may start to wear on you — and your business. If your small team is doing too many things, something will eventually fall through the cracks and compromise your business model.

    Some businesses choose to invest their money in their talent, believing that this is one way to keep their business competitive and innovative. This can be a great move, if there s a clear connection between the hiring decision and an increase in revenue. But if having an extra set of hands around helps you focus on the big picture, that alone may be worth the loan cost.

    Regardless of the exact reason you re considering a business loan, the point is this: If, when all costs are factored in, taking out the loan is likely to improve your bottom line — go for it. If the connection between financing and a revenue increase is hazy, take a second look at whether taking out a loan is your best choice.

    You want to be confident in your ability to pay back a business loan over time and to see your business succeed. Every business decision involves taking a risk. Ultimately, only you can decide whether that risk is worthwhile.





    Tags : , , , , , , ,

    Canada Small Business Financing (CSBF) Loan – RBC Royal Bank #business #consultants

    #small business financing

    #

    Canada Small Business Financing (CSBF) Loan

    This federal government guaranteed loan provides the financing you need to get a business started or help an existing business grow. The CSBF Loan is designed to help businesses purchase, install, renovate and modernize business equipment and other fixed assets.

    How can this help my business?

    • The Canada Small Business Financing Loan can provide a Canadian business with up to $1,000,000 in financing for the purchase of land or business premises ($350,000 for leasehold improvements and equipment)
    • With assistance from the federal government, businesses can support their financing requirements without using personal assets as security
    • Term loans extend financing assets not normally covered by traditional financing options, for example, leasehold improvements

    What else do I need to know?

    • If the loan is for the purchase of premises, 50% of the floor space must be for your business activity
    • Current fiscal year gross revenues must not exceed $10,000,000
    • The maximum value of all CSBF Loans an independent small business may have outstanding with all lenders (including RBC Royal Bank) cannot exceed $1,000,000 ($350,000 for leasehold improvements and equipment)
    • Applications must be submitted with a business plan which includes financial statements or projections
    • Eligible purchases made within the past six months can be financed
    • Loan terms are generally 7-10 years depending on the asset being financed
    • Maximum interest rate on variable rate loans is Prime + 3.0%, fixed rate loans is Residential Mortgage Rate + 3.0% which includes an annual administration fee equal to an annual rate of 1.25% which is payable to the government
    • A one-time up front government registration fee of 2% of the loan amount is payable to the government and can be added to the loan principal
    • Business Loan Insurance Plan is available (certain conditions may apply)

    To find out more information:





    Tags : , , , , , , , , ,

    Current SBA Loan Rates #small #scale #business

    #sba loan rates

    #

    Credit Cards

    Banking

    Investing

    Mortgages

    Loans

    Insurance

    Credit Cards

    Banking

    Investing

    Mortgages

    Loans

    Insurance

    Current SBA Loan Rates

    You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved. Here’s how we make money .

    For many small-business borrowers, government-backed loans are the holy grail. SBA loan interest rates are some of the most competitive among lenders.

    So keeping up on the Small Business Administration’s terms and rates is part of a smart approach to finding a business loan. The 7(a) loan is the SBA’s most popular product and offers a flexible sum of cash for a variety of uses, including managing daily operations, purchasing new products and refinancing high-interest loans. Business borrowers also find low-cost financing for land and other major purchases with SBA 504 loans.

    The SBA sets interest rate guidelines for lenders, which helps keep small-business owners borrowing costs low.

    Here’s a breakdown of SBA business loan terms and rates, including interest and fees.

    SBA loan rates

    SBA 7(A) LOAN TERMS:

    • 7(a) loans do not have a minimum loan amount and max out at $5 million. The average SBA loan was around $374,000 in 2015.
    • The SBA guarantees 85% of your loan if it’s less than $150,000 and 75% if it’s more than $150,000. However, it limits guarantees to $3.75 million.
    • SBA loans aren’t easy to qualify for. Read up on the qualifications for SBA loans to make sure they’re right for you.

    SBA 7(A) INTEREST RATES:

    7(A) LOANS REPAID IN LESS THAN 7 YEARS

    *The prime rate, hiked on Dec. 17, 2015, is 3.5%.

    Example: The maximum interest rate for an SBA loan of $25,000 or less, paid in less than seven years, is 7.75%.

    But interest rates make up only part of your expenses. Your APR reflects your true cost of borrowing, including your interest rate and all fees associated with the loan.

    How SBA loan rates are set. Interest rates for SBA 7(a) loans are the daily prime rate, which changes based on actions taken by the Federal Reserve, plus a lender spread. The spread is negotiated between the borrower and the lender, and can result in either fixed or variable interest rates. However, the SBA caps the maximum spread lenders can charge based on the size and maturity of the loan.

    A lender providing an SBA loan may also calculate interest rates using the one-month London Interbank Offered Rate plus 3% or the SBA’s optional peg rate instead of the daily prime rate.

    GUARANTY FEES

    7(a) loan guaranty fees are based on the loan amount and maturity date and apply only to the guaranteed portion of the loan. Lenders are required to pay the SBA the guaranty fee, but some pass the expense on to you. However, the SBA limits the maximum amount you will be charged.

    You ll pay no guaranty fee if your loan is less than $150,000. If it s more than $150,000 and matures in less than a year, you’ll see a 0.25% guaranty fee.

    If your loan is for more than $150,000 and takes more than a year to mature, you’ll be charged based on a three-tier system:

    • 3% on loans of between $150,000 and $700,000
    • 3.5% on loans of between $701,000 and $1 million
    • 3.75% on loans of more than $1 million

    CDC/504 loans

    Business borrowers looking to buy land, buildings or major equipment with long-term, fixed-rate financing can apply for SBA 504 loans. These loans are partially funded by certified development companies, nonprofit organizations focused on community economic development. The loans require collateral, typically the assets that are being financed, as well as personal guarantees from the principal borrowers.

    504/CDC SBA LOAN TERMS

    • 504 loans are available in 10- or 20-year terms: As of March 2016, 10-year term loans had an effective interest rate of 4.33% and 20-year term loans had an effective interest rate of 4.55%.
    • Fee percentages are fixed but reset every five years based on principal, often resulting in a lower payment for the borrower.
    • The minimum loan amount is $50,000; the maximum is $5.5 million.

    How 504 loan rates are set: Small-business owners seeking a 504 loan are on the hook for a down payment of at least 10% of the cost of the project. A traditional lender, such as a bank, puts up 50% of the loan, and a certified development company puts up as much as 40%. The SBA guarantees 100% of the CDC portion of the loan.

    SBA 504 loan terms are primarily made up of the following:

    • The Treasury bond rate: Loans with 10-year terms are priced based on the five-year Treasury bond, while loans with 20-year terms are based on the 10-year Treasury bond.
    • A guaranty fee that is paid to the SBA.
    • A servicing fee that is paid to the CDC.
    • A fee paid to the central servicing agent.

    When applying, you ll be quoted an effective interest rate, which is the sum of those three fees and the Treasury bond rate. However, you ll also pay a one-time fee of 2.15% to the SBA, as well as some additional fees, meaning your total cost of borrowing (or annual percentage rate) will be slightly higher than your effective rate.

    The bottom line on SBA loan rates

    SBA loans give you the best interest rates, though the application process can be complicated and time-consuming. If you find yourself in need of money fast, numerous online lenders can help you get the capital you need. However, they have less favorable APRs.

    Find and compare small-business loans

    If SBA loans aren t the right fit, compare other small-business loans to meet your needs and goals using our tool. We gauged lender trustworthiness, market scope and user experience, among other factors, and filtered lenders by categories that include your revenue and how long you’ve been in business.

    To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans page. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

    This post has been updated. It was originally published Jan. 8, 2016.

    You may also like

    Lender reviews

    See how different lenders stack up in NerdWallet’s expert reviews

    We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines. and avoid disclosing personal or sensitive information such as bank account or phone numbers. Any comments posted under NerdWallet’s official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.

    2016 NerdWallet, Inc. All Rights Reserved

    Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.

    Additionally, this site may be compensated through third party advertisers. However, the results of our comparison tools, blog content and editorial reviews are based on objective analysis. For more information, please see our Advertiser Disclosure .





    Tags : , , ,

    Merchant Cash Advance vs Business Loan – Small Business Blog #business #consultant

    #business cash advance

    #

    Merchant Cash Advance vs Business Loan

    When things are going great, businesses have the cash flow they need for success and growth. During lean times or tight transitions, though, your company may need to find a cash advance loan to keep the doors open or to successfully expand. Though a myriad of funding options exists, merchant cash advances and platform lending like that offered here at Kabbage.com are two of the most popular and advantageous options.

    The trick is understanding the difference between the two. Each has its own unique characteristics, and is more or less appropriate for a specific business need.

    Let’s start with definitions.

    What is a Merchant Cash Advance?

    A merchant cash advance gives a business up-front cash, and takes payments from the credit card receipts on a regular (often daily) basis according to an agreed-upon amount. If you’ve been in business for more than a year, you’ve almost certainly received at least one phone call offering you merchant advance funding.

    What is a Business Loan?

    A business loan also provides up-front cash, but is paid back in monthly installments. These are usually withdrawn directly from your operations account, but terms are flexible if another method works better for your business.

    For example, let’s say your company needed $1,000 for an advertising blitz in the month prior to your peak season. With that advertising in place, you would be positioned to lead the pack in your region for your industry. Without it, your competition would get the lion’s share of the business and the lost business would amount to far more than the $1,000 you would invest. But it’s been a year since the last peak season, and you don’t have the cash on hand. You need the cash, and like any smart business person you look at the two cash advance options for your business in detail.

    Merchant Cash Advance vs Business Loan

    Though it comes from the newer platform lending model. a Kabbage business loan is still legally a loan. This means it’s scrutinized by federal authorities and subject to limitations and enforcement. Merchant cash advances aren’t technically a loan because of how the payments are structured. This means they aren’t as regulated or carefully watched. This doesn’t automatically mean that merchant advance funding comes with abusive interest rates and contracts, but it does mean you should read and understand that contract as completely as possible.

    Merchant cash advance loans approve any business that shows a history of credit card receipts sufficient to pay the money back. This makes them attractive to companies with new or bruised credit histories. Kabbage loans look at data from a variety of sources, including social sharing indicators, your cash flow reports, traditional credit reporting and industry metrics. Armed with that information, Kabbage can grant credit to struggling companies (at a higher interest rate to justify the risk), but can give lower rates to those who have earned them.

    In this category, both means of lending are about equivalent. Kabbage loans deliver funds within 24 hours of approval. Most merchant cash advances work at the same speed – but not always. Ask about this if you go with merchant advance funding and need the money quickly.

    Merchant cash advances take a percentage of credit card sales until the loan is paid. Kabbage loans take 1/6 th of the loan plus interest each month for six months. If your company needs flexibility that matches performance, a merchant advance might be the better option. If you want reliable, predictable costs for the borrowed money, Kabbage loans serve those goals more effectively.

    For the first two months of a Kabbage loan, the interest rate is between 1 and 13 percent of the principal, based on the metrics gathered during the approval phase of the application. The rate then falls to 1 percent for the remaining six months of the loan. Merchant cash advance operations do not typically publish their interest rates. Independent analysis of a variety of merchant advance funding offers puts the average APR at more than 38 percent.

    Merchant cash advances often include set-up fees, processing fees and even payment fees that can as much as double the actual cost of the loan. Kabbage loans include no extra fees. They cost as much as the “price tag” says.

    Which is the better option? As with all business decisions, there’s no single good answer. Platform lending like Kabbage serves one set of business needs, while cash advance loans serve a different set. While we can’t give you a definite answer, we hope this has helped you identify the best questions. If not, watch this two minute video on Merchant Cash Advances vs Kabbage Business Loans for more information.

    If you have experience with merchant cash advances versus business loans, tell us a bit about it in the comments below. Help the Kabbage community benefit from your experiences.

    Jason Brick speaks internationally to small businesses after a fifteen-year career in managing companies for himself and others. His books include the best-selling Mastering the Business of Writing and upcoming Ownership Evolution. When not writing or speaking he enjoys martial arts, board games, cooking, travel and spoiling his wife and sons. He usually lives in Oregon, but is spending the year in Malaysia.

    Latest posts by Jason Brick (see all )

    You might also like these posts:

    Get the security of a business line of credit today

    Qualify for a line up to $100,000 in minutes

    Browse By Category

    Browse By Category

  • Contribute:

    Interested in guest blogging or have a pitch for the Kabbage blog editor?

    Quick Links

    Contact

    Refer a Business, Get $200

    Help your friends grow their small businesses and earn a gift gard! Find out more

    Kabbage is powered by the Kabbage Platform. Visit the website

    *Kabbage can approve you in minutes when we are able to automatically obtain your business data and instantly verify your bank account. In some situations errors may occur during the sign up process, or we may need to send micro-deposits to confirm your bank account for security purposes. If this is the case, it may take up to several days to provide you access to funding.

    2016 Kabbage Inc. All rights reserved. Kabbage is a registered trademark of Kabbage, Inc.
    All Kabbage business loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.
    Celtic Bank Privacy Policy





    Tags : , , , , , , , ,