Lenders Who Offer Financing for Purchases, Improvements, and Business Expansions

July 30, 2014 By

Banks, credit unions, non-bank lenders, and governments offer small business loans. Many businesses apply for government financing because of the longer payback period.

Long-term and Short-Term Loans

Businesses apply for different types of government funding, including equipment and micro-loans. In addition to loans under government programs, credit unions and big and small banks offer different financial solutions. Applicants can choose from unsecured and secured loans, and the latter feature lower interest rates. Secured loans require some form of collateral such as real estate holdings, machinery and equipment, interest earning deposits, inventory, fixtures, and others. A good credit score is the main requirement for an unsecured loan. Banks also offer term, commercial fishing, and conventional loans. Traditional lenders such as brick-and-mortar banks usually offer debt financing. Banks also provide real estate loans to construct or purchase industrial, retail, and apartment buildings. Financial institutions also offer permanent and owner-occupied financing. Banks provide micro-loans to young businesses and start-ups. You can use the funds to purchase supplies and materials or as working capital. The interest rate usually varies between 8 and 13 percent. Short-term loans are another option if you need cash for purchases, inventory, or accounts payable. In addition, there are small business loans under different government programs that come with attractive interest rates.

Banks require documents such as licenses and business certificates, loan application forms, and others. Business owners must submit documents such as financial statements, bank statements, business plans, resumes, and income tax returns. It is a good idea to provide a brief history of your company. Bring your cash flow statements, corporate resolution, and proof of non-business income. Banks are also interested in your business profile – length of time in business, history, number of employees, sales volume, etc. In addition, you must submit a loan request that describes the type of loan, amount, purpose, preferred payment options, and so on. Some banks also require that applicants submit copies of contracts and business registrations. Make sure you write a solid business plan to increase your chances of getting approved.

Business owners are also offered credit cards, lines of credit, equipment financing, equipment sale-lease backs, and other financing solutions. Borrowers can apply for multi-family real estate loans, equipment financing, and more. Business acquisition loans help companies to purchase existing businesses.

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Types of Business Financing

May 10, 2014 By

As a rule, financial institutions require personal guarantees and some type of collateral. There are other options for businesses, including grants, revolving lines of credit, loans from friends and family, and angel investors. Personal financing in the form of home equity loans is also used. Generally, loans from friends and family are the most effective and safest way to start a business. Grants are also offered to businesses that focus on research and development. Local, state, and federal governments also offer grants.

In addition to government financing, there are loans from banks, credit unions, and non-bank lenders. They usually offer a higher interest rate compared to funding under government programs. Borrowers are asked to present a business plan, forecasted financial statements, and other documents. Other documents include registrations and licenses, personal background information, etc. Your chances to get an attractive offer increase if you submit a business plan. Borrowers with fair credit are asked to pledge some asset. This can be real estate, land, equipment, commercial vehicles, and others.write

Businesses benefit from the fact that these loans are guaranteed by the government. Financial institutions require that borrowers offer collateral, a breakdown of their capital, and cash flow projections. Loans are also offered to businesses that seek to finance improvements and leaseholds. Businesses use the funds for different purposes, except for a partial change of ownership. Applicants are not allowed to refinance existing debt. In addition to standard types of financing, applicants can choose from rural business, advantage, and other types of business loans. Governments also offer microloan programs to non-for-profits and small businesses. Businesses also use microloans to purchase supplies and inventory and for working capital. The criteria of intermediary lenders and the presence of collateral determine the loan terms. Individual retirement accounts, mutual funds, jewelry, and perishable inventory cannot be used. Equipment and conventional loans are two options to consider. Government backed loans are also offered through micro lenders, community development organizations, and others. The funds can be used for different purposes, including the purchase of commercial vehicles, machinery and equipment, renovations to buildings and premises, land, and others . Entrepreneurs, small business owners, and new start-ups apply for financing. Peer to peer lenders, banks, credit unions, and other lenders offer business loans. The type to choose depends on factors such as sector and industry, amount required, interest rate, and others.

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