Three of the Best Kinds of Loans For Small Business Owners!
Running a small business is a lot different from running a big company. First off, small businesses cannot start with a big budget because they do not have funding. On top of that, they are not always eligible to get loans due to the nature of their business. A bad credit history can truly mess up their chances of getting a loan, however small. Some loaners have a very strict documentation policy, and some are probably long-term loans that they cannot afford. This means that when it comes to taking loans, small businesses can get stuck in one place for all the wrong reasons. Hence, here are some of the best loans that small-business owners can avail. The other good news is you can get them really fast.
Peer To Peer Loan
The Peer To Peer (P2P) loan is becoming increasingly popular because of its convenience. The required conditions are often less strict than other places. There are a number of platforms that offer this kind of service, and for each, the rules are a bit different. But in general, the application process is a lot easier. The interest rates vary, too, but the repayment time is may be completed within three, five, or seven years. For individuals, the loan amount can go up to $35,000, while businesses may avail up to $300,000. The only downside here is that interest rates might be higher than other places. Online platforms usually connect borrowers and lenders, but, there is not just a single lender. The loan amount is usually distributed to avoid a higher risk factor. Some of the P2P loaning platforms are Lending Club, Prosper, Upstart, and Funding Circle. The chances of getting your loan approved are higher on these online platforms.
Microloans are perfect for those who are not looking for big loans and bigger interest rates. It is also aimed at owners who belong to less-privileged communities. Microlenders offer non-profit financing, and Kiva is one of the most well-known microlenders that operates online in 80 countries. Loans offered can go up to $50,000 and can be returned within 40 months. However, you will need to meet specific requirements to get a microloan. In order to know if you qualify or not, get in touch with a microlender in your state who will be able to offer you additional information in case you are interested. If you belong to a community with a low income or live in a specific low to moderate income area, this is your best bet. Some microlenders include Liftfund, Pacific Community Ventures, and Main Street Launch.
Business Line Of Credit
A business line of credit works like a credit card. The best thing is that you do not have to apply for a loan over and over again. Once you have a business line of credit, you can repeatedly use your line of credit. The credit line can range from $5,000 to $150,000. Convenience is at your fingertips as a small business owner through this kind of loan because 1) their interest rates are much lower than credit cards, and; 2) loans are usually disbursed quickly — as fast as 36 hours! Looking at the nature of your business and your other documents, the lender has the upper hand in deciding what should be your maximum borrowing amount. Just like credit cards, you need to pay a minimum amount every month and an interest rate is applied, too.
Lines of credit are available in banks as well as online lenders. But online borrowing might be more expensive as interest rates are usually higher. On the upside, the borrower requirements are less strict. The basic requirements include a high credit score (500 and up) and history of revenue (showing minimum $25,000 annually). Your financial statement from your bank and documents mentioning your tax returns are the common requirements that you need to provide banks. However, if you do not qualify, you can always go online. These are some of the places that offer a business line of credit — Fundbox, OnDeck, and Kabbage.
Money is extremely important for all kinds of business, notwithstanding its size. Knowing where to go when you are short of funds and getting a loan as early as you can may help avert a crisis from blowing up. Hence, we hope this might come in handy when you are looking for help.
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