Business Planning Services Plan: The Ultimate Guide

The Ultimate Guide -

In Fit Small Business, we have written dozens of articles about how to obtain a small business loan: how to get a small business loan. This guide brings all these resources together in one place. We will summarize the advantages and disadvantages of each of the main business financing options, you can say what you have to qualify, and links where you can apply. Consider this your one stop shop for a small business loan?

Before we get into the various options, it is important to understand the four main factors that determine what types of business loans are best for you. These are:

time in the business
Personal credit score
.. Business revenue & profit.
guarantees that you have to secure the loan.

Typically, the longer you've been in business, the higher your personal credit score and business is sales, and the more collateral you need to return the loan , the easier it is for a loan and the lower your interest rate will qualify. The financing options that are best for you, also depends on how fast you need financing and how your customers typically pay (for bills, credit cards, etc.). Below we will first summarize each corporate financing option and then go into the details.

Summary of Small Business Financing Options

arise with so many new types of lenders these days, it can be difficult, just financing to keep all. Here's an infographic, the different types of business loans and business loans demands together. Below we explain the options in further detail, starting business loan with the lowest interest rate and end up with a higher-rate products and personal sources of finance such as credit cards and home equity loans. We round off the article with some general things to keep in mind when to look for a small business loan.

your financing options in detail

Part 1. Bank and SBA loans

. For established companies and borrowers with good credit

SBA 7 (a) loans

A 7 (a) loans with support from the US Small Business Administration (SBA) is one of the best ways to obtain business capital. You can borrow between $ 5k and 5m $. The loans are not made by the SBA. They will be made by a partner bank or lender through the SBA in case partially guarantees the borrower the loan can not repay.

qualification criteria

usually you need to qualify the following for an SBA loan for an existing business .:

Be in business for at least 2 years
about 680 and good credit history personal credit score. Check your guests here for free.
may require a deposit, when used primarily on real estate purchases.
must personally guarantee the loan and in some cases to pledge collateral.
need a business plan and detailed financial information on the business.
business is profitable.

In some cases looking for a person who can create a new company to get a SBA loan, but only if they industry and management experience, a sizable down payment and an excellent credit.

Pros

Inexpensive (6-9% APR).
Large amounts of funding available.
long terms (10 years typical) to make lower monthly payments. have
In many cases, you do not offer collateral or a downward payment.

Cons

Need to qualify excellent credit.
Can be a slow process, requires a lot of paperwork.
There must be a guarantee fee to the SBA for loans to pay over $ 150K and referral / packaging costs and closing costs for all loans.

Resources

How apply for SBA loans - The Ultimate Guide
types of SBA loans
Review of SmartBiz, recommended provider of SBA loans
SBA loan prices
SBA loan Calculator
to a franchise with an SBA loan financing

Click here Exact Prices & see if you qualify

Standard Bank loans or credit lines

when your Bank does not participate in the SBA program or if you need a little money quickly, you should look for a standard bank loan or line of credit application.

qualification criteria

The requirements for a standard bank loans are very similar to an SBA loan, unless you have to put down more collateral or money can.

for at least 2 years in the business.
Personal credit score over 0 and good credit history.
In most cases, you have a 20% payment have and pledging collateral.
must personally guarantee the loan.
you need a business plan and solid Business financials.

Pros

Inexpensive (15:09% APR)
Large amounts is available to finance - .. Technically no limit
Lange make terms (5-10 years typically) monthly payments lower.

Cons

Need to qualify excellent credit
.
Quick and process SBA loans but still requires a lot of paperwork.
You must have a down payment and collateral.
must pay closing costs, and there may be other fees.

Resources

Small Business Loan prices
How to get a loan to buy a business
Working Capital: How to raise money for an existing business [estateloans
business loans against credit lines

visit SmartBiz

Commercial Real

usually buy a building or other commercial properties

requires a large expenditure of capital. For this reason, a SBA 504 loan or a commercial real estate loan from a bank are your best bets.

qualification criteria

business plan and projected financial
Great personal credit history. (Score on 680 - check here for free) for small businesses and experienced team behind the project for larger deals
10-30% deposit
must personally guarantee the loan.
For income producing property must be the tenant creditworthy.
For residential property, require 504 loans SBA that you occupy at least 51% of the property and produce jobs through your project.

Pros

Inexpensive
(5-15% APR).
Large amounts of funding available.
Lange conditions (10-20 years typically) make monthly payments low.

Cons

Need to qualify excellent credit
.
Requires a lot of paperwork and investigation into the property and (if applicable) tenants.
Requires a deposit.
pay Must exam fees, closing costs, and there may be other fees.

Resources

Buying vs. Leasing Commercial Real Estate
to buy a building? Check Out An SBA 504 loan!
Buy Income Producing Real Estate?
Overlooking Fix and Flip Real Estate?
Commercial Loan Calculator

for at least 3 years in the business? Do you have good credit and 15% down? Talk to qualify 7a loans as commercial real estate for a long-term SBA with SmartBiz.

visit SmartBiz

Part 2. Lending Alternatives

For newer companies and borrowers with lower Credit.

Credit

Do not poo -poo credit cards as a way to finance your business. used Whether for start-up capital or for an existing business, credit cards can be convenient and surprisingly cheap. There are also services that will help more low-rate cards in a business line of credit combine any collateral or deposit required.

qualification criteria

vary qualification requirements on the credit card, but here are some general guidelines:

0 and good credit history personal credit score. Check your guests here for free.
to obtain a business credit card, some issuers require ON to check or other documentation your business.
must personally guarantee repayment.

Pros

Relatively Value (24.8% APR), serving with many cards 0% promotional APRs on purchases and balance transfers.
There are fast credit card (you probably already have one) to obtain and comfortable.
offer many rewards cards or cash back for the purchase.
business credit cards help build business credit.

Cons

Costs most or all of your balance each month can add up if you do not pay off.
too many credit cards Once you could hurt your personal credit score.
have some cards can
annual fee.
in by limited credit line, which you can purchase.

Resources

When (And when it is not), use a credit card to your Business Fund
Best Small Business Credit Cards
Best Secured business credit card (for borrowers with lower credit scores)

See our Recommended Business credit card

Recommended credit cards

Peer2Business loans

Peer2Business loans connect individual borrowers with individual investors in an online marketplace. You can use these platforms to business loans of up to $ 500K.

qualification criteria

Personal credit score over 650 and a good credit history. Check your guests here for free.
At least 2 years in the business.
annual business is sales over $75K.

Pros

Pretty Value (30.5% APR) compared to other banking options.
Can financing in 1-2 weeks, compared to several weeks or months for a bank or SBA loans.

Cons

Need a good
credit score.
There are sales minimum.

Resources

Can Enter a peer2peer Loan financing for your business?
Review of Kick Further, peer2peer platform for stock lending
Summary of financing district
Review of Lending Club

apply for a Peer2Business Loan

apply now

Short-term loans and credit lines

Short-term loans are loans of non-bank lenders, which are paid back in 3-24 months. You can borrow up to $ 250,000. These loans are suitable for borrowers with lower credit scores or borrowers money fast in a few days to Tops.

qualification criteria

Personal credit score over 500.
at least 1 year in business ,
month business is sales over $2,500.

Pros

Really fast - you can finance in 1-3 business days to receive
Minimal paperwork, online application
No collateral required if the lender. a lien is. usually put on your business assets.
Some credit short-term lenders offer lines, so you can keep borrowing, how you pay your balance.

Cons

More expensive (40-80% APR) than most other sources of funding.
Lien may make it difficult to a second company, loan.

Resources

Best Short Term Provider :. Kabbage vs. OnDeck vs. Recommend PayPal
Review of OnDeck , our short-term lender for companies with annual sales of more than $ 100K
Review of Kabbage recommended short-term lender for companies with an annual turnover of less than $ 100K.

apply for a short term loan

Click here
If your business makes more than $ 100K in sales per year

Click here
If your company makes less than $ 100K in sales per year

invoice factoring

you have company or provide public customers invoiced, 30-0 days to wait for goods or to be paid services, which you have provided? By a calculation factor, you can convert unpaid bills in working capital. Our preferred account factors are discrete (they are not your customer contact), and they offer fair prices without required minimum or long-term contracts.

qualification criteria

Other than customer invoice billing, here the minimum criteria are to use a weighting factor:

3-6 months after billing history
bills mature in 0 days or less.
creditworthy customers, pay the bills on time.
require Some lenders, 530. about personal credit score
Some lenders require the use of accounting software such as QuickBooks or Wave.

Pros

Fast: Financing in 1-3 business days.
With capital while you wait for the customer to pay, you may be able to stabilize your business "cash flow.
funding works like a line of credit so that you can keep borrowing as you pay what you borrow.
Lenders are your customers connected. The payment is in your company ' name.

Cons

More expensive (30-60% APR) than many other sources of funding.
financing amount is limited by the value of your invoices, up to a maximum of $100K.

Resources

What Invoice factoring is and how it works
Best Factoring Company
Review of Fundbox , our recommended weighting factor of borrowing less than $ 25K.
Review of BlueVine recommended weighting factor of borrowing more than $ 25K.

company for invoice factoring

click here
If you more than $ 25K in capital

Click here
If you less than $ 25K

merchant cash advance

companies that do a large amount of credit card sales and not been able to find other types of financing, merchant cash advances can be regarded. This should be a last resort because it can be very expensive. The exception is PayPal and Square that offer lower cost merchant cash advances for businesses that loan payments on their respective platforms.

qualification criteria

accept process a large volume of credit card payments.
Some lenders require a personal credit score over 500.
Some require lenders that you use a particular credit card processor.

Pros

Fast: obtain financing in 1-5 business days
payment is convenient because there is revenue from your daily credit card -. if you do not have sales 1 day resume payments on the next day that you have sales.
Less expensive (APR 35%) options available for Square and PayPal companies.
In most cases, no personal guarantee required.

Cons

Traditional Merchant cash advances can be very expensive (APR from 80-100%), cut in the small business' profits margins.

Resources

Small Business management leader Merchant Cash Advance
Best merchant cash advance
Overview of PayPal merchant cash advance
review of Square merchant cash advance

click here for a merchant cash advance companies

part to qualify 3. personal capital sources

These personal financing sources come in handy for start-ups, and if you are unable for a business loan.

Home Equity

If you are a homeowner, it is possible to get a loan or a line of credit from your backed up to get home. These are very cheap, but the main risk is that you can lose your home if you. On the standard loan

qualification criteria

must have at least 20-30% of your mortgage (ie you must have 20-30% equity in your home) paid
a credit score above 650 have (check your score for free here).
history of on-time mortgage payments and no foreclosures.
Not many other debts ( Debt-to-income ratio not higher than 40-45 %)

Pros

Inexpensive
No Business Security needed

Cons

Home can be closed off, if you make no loan payments.
fees and prepayment penalties can be assessed

Resources

Should Use a Home Loan or Line of Credit to finance your business?

Retirement Funds

If you have a retirement account, you can invest the pension fund in your company with a rollover for Business startups (ROBS). it allows you to withdraw the funds and penalties in your business without taxes or early withdrawal a ROBS. this is structured as a prolongation of the Fund, not as a loan. the disadvantage is that your retirement losing nest egg, if the business fails.

qualification criteria

eligible retirement account such as a 401 (k) or traditional IRA (roth IRAs are not eligible).
at least $ 50K in your account you have that 're ready to to invest business.

Pros

Not a loan, so no debt or interest incurred.
If your business is successful, will grow your retirement. 'aren
ROBS fees t as high.

Cons

Although not very high, ROBS fees must paid beginning and then every year.
If your business fails, you can lose all your retirement.

Resources

ROBS - The Ultimate Guide
Best ROBS Provider

get a FREE ROBS counseling

Free consultation

family Borrow & Friends

do not forget this tried and true method for a business to borrow money borrow from family and friends can be convenient and cost-effective. They treat money from family and friends as a loan or give them equity in exchange for funds. Just be sure the arrangement to get later to avoid any inconvenience in writing.

qualification criteria

you have friends or family who are willing to give you money or invest you borrow in your business.

Pros

Often inexpensive because family and friends know your history and confidence in your potential.
Convenient.

Cons

Family and friends can spontaneously to let you run like the business advice. If it is a capital investment, investors have the right to have some control over the business.
If the business fails, could create tension with the family or friends.

Resources

Raising Money from friends and family - loan or equity

peer2peer consumer credit

We Peer2Business loans covered up for established companies. Startup owners to obtain a peer2peer consumer credit.

qualification criteria

Good credit score (ideally more than 650 - check for free)
must be the entrepreneur in the US resident over 18 years with a US bank your guests here account

Pros

Low Interest
(5-30%).
There are no restrictions on how you can use the loan proceeds.

Cons

Need to qualify good credit.
Only small quantities available to financing available (less than $ 35K).

Resources

Can a peer2peer loans used to finance for your business?

Apply for a consumer P2P Loan

apply Now

Crowdfunding

If Your business idea is still in the formation stage, you may want to consider crowdfunding (such as on a website Kickstarter ) as a way to obtain start-up capital. Crowdfunding allows you to obtain the financing of many individual donors. in exchange for the funds, you need to provide some small gift or reward for the donor, such as a free product or service from your company. in some cases you may offer equity to obtain larger amounts of funding .

qualification criteria

18 years old or older.
A citizen or permanent resident the country that you want create a project in.
address, bank account, and the government issued ID in the country that you want to create a project in.
Major credit or debit card.

Pros

Not created a loan so that no debt or interest.
support of many supporters you can inspire your business cause success.

Cons

Most Crowdfunding sites have an all-or-nothing model: If you do not reach your preset funding target, you do not get money.

Resources

Kickstarter Reviews
Kick Further: crowdfunding meets inventory financing
FlashFunders: Better Than crowdfunding

your next purchase of inventory

apply now

What to keep in mind when looking for a Small Business Loan Crowd Fund

Before looking for funding, you should consider the following to help narrow your search.

time in the business

Have you need start-up capital, or do you have for a number of years in the business?

in general, it is difficult to get financing for a start. Business lenders who provide typically give only small amounts of funding for start-ups or are very expensive. The best option for the start owner is to get a personal loan or personal assets like home equity or bond funds are used.

Established businesses have many more options provides. If you have an established profitable business and run good personal credit, you will be a good candidate for an SBA or bank credit, which are the cheapest forms of corporate finance.

resources

Best Startup loan providers
Startup Business Loans: The 9 best options

your credit Score

from all the business loan requirements, your personal credit score is likely the most important factor. Your credit score will help determine where you should apply. Loans

Speed

How below.

Resources

Invoice

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