Whether you’re just starting a business or are already immersed in running your company, a business loan can help you fulfill your goals. For a new business, a loan provides start-up capital to help you purchase equipment, inventory and property. Business loans also increase cash flow to help established companies expand or make capital improvements.
There are two primary types of loans. Secured loans require that you offer collateral–property the lender can seize if you default on the loan. Unsecured loans don’t require collateral. You’re approved on the strength of your credit history and your company’s financials. You might also consider a line of credit, which makes available a specific amount of money from which you can draw.
The benefit of a line of credit is that you pay interest only on the amount that’s outstanding. The Small Business Administration (SBA) is a useful resource for business owners considering taking out a loan. It guarantees up to 80 percent of qualified small business loans. The loans are made by private lenders that follow SBA guidelines.
You’ll need to submit a lot of documentation with your loan application, so begin gathering it as soon as you decide to borrow. In addition to the separate SBA application, if you’ll seek an SBA-guaranteed loan, you’ll need a statement of personal history, your personal and business financial statements, projected financial statements and your personal and business tax returns from the last three years.
In addition, the lender will ask for your resume, your business certificate or license, the names of–and contact information for– companies with which you’re affiliated, as well as a history of your company and a copy of your business lease.
If your loan is for the purchase of a business that already exists, you’ll need the company’s financials, tax returns and a list of inventory, equipment and such assets as furniture and fixtures.
To apply for funding for your small business, use the form on the right to begin the application process.