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small business capital
Getting the Funds You Need to Stay Ahead
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By: Arlette Measures
Getting the Small Business Capital You Need to Stay Ahead

A business loan at the right time , and with the right lender, can pull your organization through tough times, allowing it to grow and thrive once things turn around. Obtaining a business loan involves several steps. If you have not already done so, creating a detailed business plan would be a good first step. Then you would need to choose a lender to work with and complete the necessary paperwork.

Sources for business loans are abundant and varied . Each lender will have their own set of qualifications and approval processes for loan applicants, as well as different types of loans and repayment schedules. Some may require that you have an excellent personal credit history. Others offer loans to business owners with lower credit scores but require additional collateral or documentation that demonstrates your ability to repay.

This guide is designed to help you through the process of finding a lender who can meet your needs. You will also find tips on how to get approved for the loan amount you desire.

Types of Business Loans



Micro loans


Provided by non-profit lending institutions and backed by funds from the Small Business Association (SBA), 'Microloans' are designed to help newer businesses and start-ups. Micro loans are between $5,000 and $35,000 and are typically easier to obtain than other types of business loans. These are community specific loans, so you should look for a lender in your area.

Each lender will have its own set of credit requirements, but all will require collateral from the business owner as well as a personal guarantee. The applicant will also need to fulfill business training and planning requirements before their loan is approved.

The maximum term for a micro loan is six years. Once the Microloan is granted, the funds may be used for working capital, procuring inventory and supplies, and obtaining necessary equipment, machinery and office furnishings.

SBA Loans


The U.S. Small Business Administration (SBA) helps businesses, which may not qualify for a traditional loan, by guaranteeing bank loans to businesses. In most cases, the SBA requires that you have already applied for and been denied a commercial bank loan before applying for an SBA guaranteed loan.

The SBA does not place a limit on the loan amount you can request and allows up to 25 years to repay. To qualify for an SBA loan, you must be willing to invest some of your own money into your business as well. They will also take into consideration your personal credit history as well as your business plan, so you should have both in order before applying.

Franchise Financing


If you plan to buy a franchise, there are a few different funding options you can choose from.

SBA Financing -
The SBA loan guarantee program includes financing for franchises,the most popular of which is their 7(a) program.

Specialty Franchise Financing -
Non-SBA programs for franchise financing include structured term loans and equipment leases. Another option is the ERSOP program, which lets you use your IRA or 401(k) as start-up investment capital without taxes, penalties or distributions.

The Franchisor -
Many of the franchise companies offer their own financing programs or will help you find a suitable lender from their own list of preferred lenders.

Personal Credit or Assets -
Some lenders will require the borrower to pay anywhere from 15 to 30 percent of the total franchise costs. A borrower may choose to refinance a mortgage or cash in their 401(k), but it is preferable not to risk personal assets if the funds can be obtained from another source, such as an established business credit account.

New Small Business Loan Requisition Norms, Although acquiring a new small business loan has become more difficult recently, government initiatives, such as the Small Business Jobs Act, have boosted small businesses and freed up lending lines.check out this page

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