Business Loans

In almost every business, new or old, you can hit roadblocks when it comes to cash flow. Maybe you’ve had a bad month, or maybe you are scaling and you don’t have the working capital on-hand when you need it. Whatever the reason may be, it’s important to have enough funds to keep your business afloat as you work. Taking out a small business loan can be a great way to get the money you need. Here are five signs that your business could be the perfect candidate for a loan.

1. Your daily ending balances are low.

If you are looking at your balance at the end of the day, and it’s barely breaking even, you might be in need of a small business loan. Especially in the beginning of making a business, or in a period of growth, it’s important to have funds on-hand in case you need to make any quick changes or purchases.

2. You have more than 8 negative days in a month

Forget about breaking even, what if you are consistently in the red. If you find that you are in the negative for more than 8 days out of the month, you could be looking at trouble in the near future. More than 8 days of ending up in the negatives, makes you a good candidate for taking out a business loan, to help get yourself back on track.

3. You need cash flow for a new contract

You shouldn’t let a lack of funds get in the way of growing your business. It would be a shame to pass up a new business relationship just because you don’t have the cash to make it happen. If you’ve managed to get yourself a new contract, taking out a business loan for some fast-cash is a fantastic way to make sure you don’t miss an opportunity.

4. You need new equipment

Just like you shouldn’t let a potential new business relationship slip away for lack of funds, you shouldn’t miss out on a new project because you can’t afford the equipment. A loan for equipment financing can get you the materials, tools, or technology you need to feel comfortable taking your business to the next step.

5. You don’t have enough money left for payroll

If your business is making you money, but you don’t have enough left over to pay the people who are helping you to make it happen, you’re in a bad situation. Paying your employees the full amount that they deserve is absolutely vital in making sure your business continues to run smoothly and successfully. Taking out a business loan will pad your funds so you make sure your employees aren’t feeling under-compensated.

Ready to apply for your business loan? Check out Onebox Funding here for a free quote.

There are many different types of loans a person can take out, from many different types of lenders. For example, a college student can take a student loan from the government, from a private lender, or from the bank, whereas a new homeowner can take a mortgage out from a whole handful of different providers. Each type of loan and lender has very different payment terms, interest rates, and requirements for eligibility.

Taking out a loan for your business is no different. There are so many different types of business loans, it can be intimidating to know if you’re choosing the right one. In this series, we will talk about the 5 main loans you can take out for your business. Today we will cover one of the most attractive loans taken out by business owners: Small Business Administration Loan.

What Is a Small Business Administration Loan?

This type of loan is actually backed by a branch of the US government called the Small Business Administration (SBA), whose function is to facilitate loans taken out by small businesses. Although these loans are backed by a Federal organization, they are not provided directly by the government. Instead, private financial institutions are the lenders, and the loans are partially insured by this governmental branch. There are a variety of types of SBA loans, ranging in size for small businesses to larger firms. For the most part, these loans can be taken out by business owners with at least a 20% stake in their companies, and are typically provided by large financial institutions, as opposed to smaller lenders.

Who is a Small Business Administration Loan Best For?

This type of loan is very sought after, as the payment terms are quite attractive to any business owner. This type of loan is great for business owners with companies that have already been up, running, and profitable for some time, who need a cash boost. These lendees should have a good credit score, and bank statements to show that they have a steady revenue stream.

The Benefits of a Small Business Administration Loan

The SBA Loan is probably the most attractive type of loan for small businesses because it has flexible payment terms and very low rates. Once a business owner is approved, he will have very low fees, and will even have the option to stretch the payment terms over up to 25 years. Also, because the government is backing part of the loan, banks are much more willing to underwrite it for eligible parties.

The Cons of a Small Business Administration Loan

Because this loan is so attractive, the application process is not as simple as that of other loan types. Potential lendees must provide a lot of documentation, including proof of a good credit score and steady revenue flow, which can take time. Personal collateral is required for an SBA loan, which could but your property at risk. Also, this loan is not applicable for new businesses whatsoever.

Does an SBA Loan sound like the right type of loan for you? Get more information here.

The majority of businesses experience, at least to some extent, an ebb and flow of successful, booming sales and a slow season. While this is perfectly normal, as supply and demand are constantly changing, the slower periods can be hard. Although your sales are going up and down as the seasons change, those few months of dry-spell can be challenging when utilities and payroll and other expenses, which pretty much remain a constant.

Seasonal business who experience difficulty during times of slower business can benefit greatly from applying for a small business loan. Taking a loan, even a small one, assures that your business has the funds it needs to make it through the slow period until your sales start to rise again. Any seasonal business owner who wants to apply for a small business loan must first complete these 3 steps to assure their loan approval.

1. Submit 12 Months of Bank Statements

If your business is even remotely seasonal, your paystubs throughout the year most likely vary greatly from month to month. Be sure to have at least one full year’s worth of bank statements available to that lender can understand the full picture of what your sales look like, and not just during certain periods of success or slowness.

2. Prepare an Accounts Receivable Report

If your business allows customers to pay with a credit card (which is practically a given in this day and age), you’ll need to have an Accounts Receivable Aging Report prepared to show the lender all of the sales that you may not have received yet in full, if at all. This will give the lender a good idea of what revenue is still yet to come, as well as an understanding of your customers’ payment behavior.

3. Submit Your Most Recent Tax Return

At the end of the day, business loan lenders want to make sure that they will be paid back within a reasonable amount of time. Your most recent tax return is probably the most important thing a lender will want to see before determining if you qualify for receiving business funding from them. They will be looking into your credit history to see if you have bad credit, big losses, or other activity that they might deem a red flag.

Taking out a small business loan during times of slower sales can be a great move for all sorts of business owners. Having working capital on-hand for any situation that comes up gives you peace of mind and a clear head to be able to use your time optimally and efficiently.

Ready to apply for your business loan? Check out Onebox Funding here for a free quote.

There are many different types of loans a person can take out, from many different types of lenders. For example, a college student can take a student loan from the government, from a private lender, or from the bank, whereas a new homeowner can take a mortgage out from a whole handful of different providers. Each type of loan and lender has very different payment terms, interest rates, and requirements for eligibility.

Taking out a loan for your business is no different. There are so many different types of business loans, it can be intimidating to know if you’re choosing the right one. In this series, we will talk about the 5 main loans you can take out for your business. Today we will cover one of the most attractive loans taken out by business owners: Short Term Loan.

What Is a Short Term Loan?

A Short Term Loan is just like any typical loan, except for the fact that it must be paid back within a year a less. As with a medium or longterm loan, the decided upon lump sum of money is given upfront to the lendee, and the payment terms are set up upon signing. An interest fee is paid along with the principal balance throughout the period of one year, until the money is all paid back. This is typically done on a weekly basis, as opposed to bi-weekly or monthly.

Who is a Short Term Loan Best For?

A Short Term Loan is excellent for business owners who may not qualify for a line of credit, and who simply need a boost of working capital. This type of loan is great for people who find themselves in urgent need of cash, in as little time possible.

The Benefits of a Short Term Loan

One of the great things about the Short Term Loan is that the majority of applicants will find themselves eligible for it. Often times, even lendees with a very low credit score have the opportunity to take out this type of loan, and with a very quick and easy application process, they will find themselves with cash in hand in no time.

The Cons of a Short Term Loan

Of course, because of the lax eligibility requirements and easy application process, it can be expected that the interest rates will be higher than other types of loans. In fact, Short Term Loans have some of the highest fees of any type of business loan available. Going along with that, the payment terms for Short Term Loans are typically weekly, and certain business might find this difficult to keep up with, especially those whose revenues vary greatly week to week or month to month.

Does a Short Term Loan sound like the right type of loan for you? Get more information here.

There are many different types of loans a person can take out, from many different types of lenders. For example, a college student can take a student loan from the government, from a private lender, or from the bank, whereas a new homeowner can take a mortgage out from a whole handful of different providers. Each type of loan and lender has very different payment terms, interest rates, and requirements for eligibility.

Taking out a loan for your business is no different. There are so many different types of business loans, it can be intimidating to know if you’re choosing the right one. In this series, we will talk about the 5 main loans you can take out for your business. Today we will cover one of the most attractive loans taken out by business owners: Merchant Cash Advance.

What Is a Merchant Cash Advance?

A Merchant Cash Advance is technically not considered to be a loan. Essentially a lump sum of cash that’s given immediately over to the lendee, in exchange for a promise of a cut of future daily credit/debit card sales, plus a fee decided upon by the lender.

Who is a Merchant Cash Advance Best For?

Although this is not a necessary criterion, businesses that make the majority of their revenue from credit or debit card sales are the best candidates for this type of loan. Retail stores and restaurants, for example, can expect that many of their customers will pay with credit.

The Benefits of a Merchant Cash Advance

One of the most attractive things about a Merchant Cash Advance is the speed. After a relatively quick application process, where you will need to present documents such as your driver’s license, bank statements, credit score (even low scores are usually accepted), and tax returns, you will immediately reap the benefits of a lump of cash, in hand. Another advantage is that, during your slower months, you will pay less money back to the lender, as they take a percentage of your credit sales each day. If you make less, you pay less. Also, a Merchant Cash Advance does not require collateral, so you do not need to put up your house, car, or equipment in order to get your funds.

The Cons of a Merchant Cash Advance

While it’s always a good thing to make a lot of revenue that month, you will end up paying more back to the cash advance, as they have taken a set percentage of your daily credit/debit card sales. Also, since there is no interest and rather a fixed rate of your daily credit card sales, there is no advantage to paying off your Merchant Cash Advance early. As with a regular loan that accrues interest, there will be no benefit to you if you pay it off earlier rather than over the entire term.

Does a Merchant Cash Advance sound like the right type of loan for you? Get more information here.

Every new business endeavor you want to embark on needs money to get it started. Unless you happen to be sitting on a large pile of cash, you’re going to need a way to get your hands on some working capital, long before you begin profiting from your sales. More often than not, new business owners opt for taking out a small business loan to get those first few thousands of dollars needed to get their businesses up and running.

While it’s relatively easy to take out a small business loan, there are a lot of terms and phrases that are part of loan jargon which might be new, and a bit confusing, for new business owners. But before you become too intimidated by the new language, we’ve picked up a handful of some terminology that you may find confusing and explained them in more simple and easy-to-understand terms.

Payment Terms

The payment term of your loan is kind of like a rental agreement on an apartment, or the terms of service when you enter into a contract with someone. Just like the agreement you make with your landlord about how much to pay, when to pay it, and what happens if something goes wrong, the payment terms on your loan determine everything you need to know about it. These terms will tell you what type of interest rate you’ll have (we’ll get to this later), how high the interest rate will be, what your minimum payment will be (weekly, monthly, annually, etc.), and how long you have to pay off your loan in full.

Variably VS. Fixed Interest Rate

Unless you’ve borrowed money from a dear friend, most likely the institution lending you funds will charge you a fee for the duration of the time you are using their money. This is what an interest rate is. The rate will be done as a percentage and will be charged according to the terms of your loan (many times it accumulates monthly). If your lender gives you a fixed interest rate (let’s say of 3.5%), then you will pay 3.5% of your principal balance every time your interest is accrued, until you’ve completely paid back your small business loan. If you’ve been given a variable interest rate, that means that the percentage will fluctuate, according to the market benchmark that month. There are pros and cons to both types of interest rates, so you’ll want to do your research before choosing the best small loan for you.

APR

APR stands for Annual Percentage Rate, and it’s basically an overall figure of how much your loan will cost you for the year. This includes any fees the lender may charge and all of the interest compounded over the year. This snapshot will tell you if the loan is worth it, and how much money you’ll need to be able to pay it back in full.

Ready to apply for a business loan with a fantastic rate? Contact us here for a free quote.