Small Business Loan Basics
Small business loans can be a great help if you need cash to grow your business, hire new employees, or make improvements to your company. But before you speak with bankers or loan officers, you need to understand what small business loans are and how they work.
To start, a small business loan is different from other types of loans because it specifically focuses on the needs of the small business owner—the borrower. The lender’s criteria for considering an application will include how much money is needed and whether that amount could realistically be paid back in time. A banker or loan officer will also look at the cash flow of the business.
Another difference of a small business loan is that it must be secured by assets. The borrower could pledge an asset like real estate to secure the loan, but most small business loans use a primary business asset as collateral. This means that if you default on your payments, the lender could repossess your company’s equipment or inventory in order to get their money back. In most cases, a bank or other lending institution will not take over a small business unless there’s enough value in the company’s main asset—the company itself—to make it worth their while.
Taking out a business loan is a process that should be carefully considered. Before speaking with a banker or other loan officer about your financing needs, it’s important to have an idea of the overall cost of the loan. Get all relevant information together—including details about your existing business loans, expenses, and income—and then meet with your banker to discuss needs and requirements.
Most banks require any small business applicant to apply in person at their local branch. If that isn’t possible, you can fill out an application online and submit it by mail or fax. When it comes time to go over your financial information with a lending professional, make sure you bring along all relevant documentation like tax returns and pay stubs. Industry experts recommend also providing copies of all contracts with vendors and suppliers. No matter how big or small your business, the amount of information you provide on a loan application is essential for a successful outcome.
Once the bank has reviewed your application, another appointment may be scheduled to go over your business loan needs in more detail. You’ll need to provide complete details about how much money is needed for a specific purpose, and you’ll also need to answer any questions that might affect your ability to repay the loan. When it comes time to choose between different lenders, make sure you weigh each bank’s criteria thoroughly and speak with multiple lenders about their repayment policies.
In the end, you’ll need to sign a promissory note—a legal agreement to repay the loan. Make sure that you understand exactly what you’ve agreed to in your loan contract before signing—and ask all the questions you have about your financing needs. The final step is to pay back the loan with regular payments over time.
For more information on business loans, contact a banker or other lending professional today.
Small Business Loan Basics: A Guide for Lenders and Entrepreneurs [ARTICLE STOP]
By Ryan Williams, Small Business Editors at AllBusiness.com
Small Business Loan Basics: A Guide for Lenders and Entrepreneurs [ARTICLE STOP]
By Ryan Williams, Small Business Editors at AllBusiness.com
Over The Counter Loans For Small Businesses And Self-Employed [ARTICLE START] When you need cash and can't get a traditional bank loan, consider an OTC loan. You can borrow money over the telephone without going to a bank or credit union and you don't even have to sign a contract with them. You may also save $50 or more on the rate by using an OTC loan instead of another type of loan. OTC loan companies often do business through telemarketers who work on salary. They may charge you $50 to $300 in "loan origination fees", but when you compare this with the cost of a bank loan, it is very small. However, read the fine print carefully before agreeing to an OTC loan. Make sure the interest rate quoted over the telephone is the rate you will receive and make sure there are no hidden fees that will be added onto your credit card bill each month. The following examples will give you a general idea of how much an OTC loan can cost.
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OTC Loan Example #1: A company making a general corporate loan may charge around 24 percent interest while a business loan for real estate or equipment may cost around 32 percent or higher. The rates you see on the internet about OTC loans are just a starting point. Each lender can charge more or less depending on the risk involved with your situation. You may pay more for a loan if you have poor credit and need some extra help making sure your payments get made on time.
Research each lender thoroughly before agreeing to any loan terms and do not hesitate to ask about anything that does not make sense. In no way should you get trapped into any contract that you do not understand before signing. This will save you money in the long run as well.
You may be charged some closing costs and perhaps fees to renew your loan or check your credit report. Interest rates vary greatly by state and by lender. Therefore, it is best to compare rates from several lenders before agreeing to a rate with any one company. You can find OTC lenders on the internet or ask your banker or your accountant if they know of any companies who could help you out.
The loans range from $1,000 to $10,000 and are usually repaid in 6 to 36 months. One lender told me that their average loan is about $5,500. Some OTC loans can be made in as little as 24 hours; however this may be rare. You should only try this with a very small amount of money the first time you borrow an OTC loan.
Via: http://www.swanet.com/finance/&d=finance&id=over-the-counter-loans Tell us about your experience with getting approved for an Over the Counter loan in the comments below!...
Small Business Loans For Anyone Who Wants To Start Their Own Business [ARTICLE START] What if you could turn an idea into a business that could make money for you? I mean, who would not want to start their own business and make money from it? Starting your own business is not easy, but you can do it. You just need the right information and advice to get started. There are many different kinds of businesses. Some businesses are small and require very little investment capital to get off the ground. There are other kinds of businesses that will require a significant investment of time and money to get set up properly.
Conclusion:
A Business Loan is a legitimate way to start, expand or purchase a business. Many small and large businesses get started and continue to operate on Business Loans. There are many ways to secure financing even if you have less than perfect credit or have a past history of not being able to make payments on time. There are several types of loans, each with their own characteristics and costs that may suit your needs and your business objectives. All in all, the process of securing financing for your business should be thought out starting with getting educated about what steps you will need to take in order to get the money you need, from whom you need it.