How to Qualify for Funding Your Small Business

Are you trying to get the financing your business needs to become a sustainable company and grow its customer base? But maybe you’ve run into brick walls or read information about how hard it is to get funding for it. Some financial institutions are still playing by the old rules and making it hard for small businesses to get small business loans or other forms of financing. But the door has also been opened for new online lenders to offer small businesses financing options, and these outlets may be places you’d consider visiting to get funding for your business.

small business loans

Funding Through Online SBA Loans

A lot of small business financing is made through loans put together by the Small Business Administration, and then offered through various lenders. Banks have usually been the primary issuers of these loans, but online lenders also offer them and actually can help you obtain your funds quicker than banks in some cases. The small business loan rates you qualify for usually depend on your FICO score, your business’s income, and other financial documents. SBA loans can be a little tougher to qualify for than other loans, but there’s a lot of different options they have from micro loans to big loans.

Funding Through Unsecured Lines Of Credit

Unsecured lines of credit are a kind of loan option that can help your business meet ongoing needs without needing to apply over and over again for more small business loans. Basically, a lender will allow you to borrow an amount of funds–without needing any collateral–up to a certain amount. The maximum amount you can borrow is your line of credit. But if you only borrow part of that amount, then that’s the only amount you’ll pay back with interest. But once you pay back the amount you owe, you can borrow again at any time. Qualifying for an unsecured line of credit can actually be easier than qualifying for a loan sometimes, but you don’t usually get to borrow as much with it.

Funding Through A Merchant Capital Advance

Different from a loan or line of credit but a little similar to invoice financing, a merchant capital advance is another way a business can borrow money. It may be a very wise, or a not so smart decision on your part to get a merchant capital advance, so you need to read very carefully all the terms that come with it, especially the factor rates. But you might benefit from it because you won’t have to make monthly payments or put up assets as collateral for it. You just need to make most of your sales through credit cards and have a credit card payment processor for your business, and basically the merchant capital advance is a payment for future credit card sales. The amount you borrow is deducted as a percentage from each future credit card purchase at your business, and it’s simply paid off once you’ve made enough sales. A merchant capital advance is one of the easiest forms of financing to get, but it can also be one of the most expensive.

Getting small business loans, lines of credit, or capital advances are relatively simple online and usually only take minutes to apply for. But you will want to make sure that your business has been using good accounting software and documentation so that you can give lenders that information when requested.

The post How to Qualify for Funding Your Small Business appeared first on The Startup Magazine.

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