23 terms that you need to know before looking for a Small Business Loan

23 terms that you need to know before looking for a Small Business Loan -

to know if you are ready to expand a small business owner, additional funds may add your company to refer to the next level. Before you apply, but your search will help you find a loan that is the best solution for your business. You might come across some terms if you want to explore your options, which are unfamiliar to you. The SmartBiz team has compiled this glossary of 23 small business lending terms to help you navigate the loan process.

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How to Get a Small Business Loan obtained

7 (a) Loan Program - The most credit program used by the SBA. , SBA loans are the best choice for small businesses with low rates and long run normally. Learn more about the eligibility, use of proceeds, repayment terms and more about the SBA here .

Vendor Aging report - Detailed year-to-date report relating to the outstanding financial obligations to suppliers. For example, if you buy something on credit from a supplier and do not have to pay the full amount,

business entities they appear on your accounts payable aging report -. When starting a business, you have to decide what Type of business unit to establish. Your choice will have important tax and legal consequences. It will also need to file, determine the income tax return form. The most common forms of business are:

• Sole proprietorship - are executed Owned and by a person. The owner is in direct control of all the elements and is legally responsible for the company's finances. There is no legal distinction between the owner and the business with a single company
• partnership -. A partnership is a single business, divided into two or more persons possession. There are three types of partnerships, listed by the SBA .
• LLC - A popular form of ownership for small businesses, a LLC shields members from personal liability for the debts and liabilities of the company. It also provides some flexibility in timing
• C Corporation -. A legal structure, the company can choose among organize owners to limit legal and financial liabilities. Learn more from the SBA .: 5 reasons to a C-Corporation
• S Corporation - A S-Corporation is defined by the IRS as companies pass the corporate profits, losses, deductions and credits by their shareholders for federal tax purposes to choose. For more information, visit the IRS website here to find .

Business Credit Report - Check A profile of your business, a business credit report contains important information, the lender if a business loan application to rate. Dun & Bradstreet (D & B) is the most popular company that issues business credit reports. For more information on business credit reports on SmartBiz Small Business Blog

Business Credit Score . - A business credit score (also known as trade credit score) is similar to a personal credit score or FICO score, but it measures the creditworthiness of the company. Business credit scores generally range from 0 to 100. Read 5 Reasons Personal Credit Scores and Business Credit Scores Separate to keep on the SmartBiz blog.

consulting - An essential roadmap for business success. This living document projects generally intends 3-5 years ago and outlines the route to take to grow sales a company. Learn how to build a business plan from the SBA, or use the user-friendly Business Plan Software . SmartBiz no loan seekers need a business plan to present, although other lenders could.

capital -. Assets less its liabilities, the interest in a company is

cash advances - a cash advance is provided a service of credit card and credit card issuers. Cardholders can withdraw cash up to a certain limit, and calculates a percentage of the retreat. Cash advances usually have much higher prices than other types of loans. This should not be a merchant cash advance (see below) are confused.

Cash Flow - calculated Usually as cash receipts less cash payments over a given period. Borrowers must seek a SBA loan SmartBiz demonstrate that they support have sufficient cash flow loan payments.

Collateral - Something pledged as forfeited security for repayment of a loan in case of default. , Collateral can companies assets such as plant and machinery, or personal assets, like your residence or car

Credit Score included - as FICO score known credit scores are a 3-digit number that summarizes your credit worthiness, in the range of 300 (worst) to 850 (best). If you apply for a loan, lenders do a "credit-pull" to check your credit score. There are two ways that credit scores can be drawn:

• A " soft pull" is a credit of the borrower affect earnings. SmartBiz uses a soft train during prequalification.
• A " hard pull " occurs when a financial institution checks your credit report. Typically, the borrower has to give permission for the request, as it could lower your credit score by a few points. This can make it difficult to obtain financing.

Read more understanding your FICO score on the SmartBiz blog.

bureaus - There are three major credit bureaus: Experian, TransUnion and Equifax. Every time you apply for a loan, the lender will check to determine your credit report through one of these agencies your credit score. (See Credit Score for more information)

debt service - The amount of the required periodic payments of principal and interest for a loan.

debt service coverage ratio (DSCR) Is your company distributed the annual net profit by the annual debt and interest payments. Most lenders will check your DSCR, before you apply for a loan approval and a DSCR of at least 1

code require - The Data Universal Numbering System abbreviated as DUNS or DUNS. It is developed a proprietary system and regulated by Dun & Bradstreet (D & B), which assigns a unique numeric identifier for a single business unit. Learn why a small business, a code on the blog SmartBiz needs

FICO -. FICO is a software that founded the FICO score in 1956. Company is a measure of consumer credit risk, become an integral part of consumer credits in the United States. The FICO score is also important when you apply for a business loan. See " Credit Score " above for more information.

Cash -. to meet cash, checks and readily convertible securities immediate and urgent needs

Loan constant - a way to the actual cost of borrowing, in order to determine the loan constant is a factor of interest used to calculate the debt service a loan. The loan constant when multiplied by the original loan amount, are the dollar amount of the periodic payment. Find out more about the Loan Constant here .

Maturity -. The date on which a loan is repayable

merchant cash advance - A merchant cash advance (MCA) is a different kind of financing for small businesses. With MCA, get working capital small businesses in exchange for a percentage of future credit card sales. A MCA is sometimes also referred to as business cash advance

Net Worth -. Property owned (assets) less liabilities and obligations owed (liabilities) is the net worth entrepreneurs. Most lenders want your net worth to know when to apply for a business loan

Prime Rate -. SBA lenders and other commercial banks peg often called the interest a market rate of Prime Rate. Learn how it works in this article: SBA Loan prices .

Working Capital -. Capital used in daily operation of the company, defined as current assets minus current liabilities

Need some money for your business? Click here to get our free guide .:
How to get a small business loan

About the author:

This article was written by the team of SmartBiz , the # 1 online marketplace for SBA loans. The advanced software of the company streamlines the SBA loan application. Each borrower is assigned a dedicated SmartBiz Relationship Manager, which provides "concierge services" throughout the application process available. Small businesses can now apply online and receive the funds as soon as 7 days. SmartBiz does only SBA loans, so we really good at them. Click here to see if you qualify for a low-rate loan of SBA SmartBiz

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