A Quick Guide to Getting Small Business Loans
Today, small businesses are the backbone of the world’s economy. They are a major part of the growing market, which help to create revenue and jobs with an increased rate. If a company has employees less than 500 people, then it falls under the small business category. According to latest research, most small businesses account for about 99% of the United States located businesses. Over 100,000 tech-related companies are United States registered. These alone just provide employment for citizens (over 2 million and they contribute to over 7%) of the national GDP.
The bad news is that approximately 30% of most small businesses all fall within the first two years, the remaining 50% fail within five minutes and more years and about 30% around ten years or more. Most research suggests that one of the leading causes for small business failure is for cash flow. Most bad finances account for over 80% failures.
If you want your company to be a success, you will need to take some precautionary measures. One of the biggest issues that you need to plan for is the possible market fluctuation, decline in customer spending, and employee insurance. Knowing that your finance is bad is one of the biggest threat and you have to make it a top priority and prepare for anything that comes along the way. At such times, applying for small business loans could be the most effective solution.
Small business loans often come in various forms and there are various lenders. You should not feel intimidated by the various varieties.
Learn About Prospective Lenders
Due to the growth of the small business sector, there are more types of lenders all willing to offer their services to small business owners just like you. When you search online, this can result in you finding several lenders. Knowing the right one to pick is one of the very first steps towards you obtaining your very first small business loan.
Lending Companies: You can choose several loan lenders like Orumfy, especially when it comes to small business loans. A recent study also suggests there are over 60% small businesses that search for smaller loans. The main advantage of choosing such companies is they treat small businesses as individual clients. They offer anything from equipment financing, SBA loans, short-term loans, and more options.
Commercial Banks: In the bank loans market, the biggest players are large banks. However, for small business owners, opting for a bank loan may not be the right solution. Not only will you need to pass a more strict process compared to lenders, but also you will not be able to access the loan that you need.
Know the Loan Options Available
Since you have a clear idea of the type of lenders that you may approach for a small business loan, the next step is to understand the various types available for you and your business. With the high diversity of small businesses, the loan options are also diverse, and there are some terms and terms that apply.
Small business administration loan is the most popular and common small business loan available. It is suitable for use for anything, and it depends on the lender. The amount of the loan can easily exceed some few million dollars. You may also use your SBA loan as a working capital to pay for debts, equipment purchase, acquire new assets for your business. As long as your business goes, SBA loan will have your needs covered.
Short Term Loans
This loan type is suitable especially if you need an amount less than about $500,000 within a short time. You collect a small amount within a short time and you can repay it easily. The approval of this loan is usually within 24 hour and the payback period depends on the value of the loan, which may range anywhere between 3 and 18 months.
Sometimes you may only need to top up an already existing business capital with some extra cash for a purchase. This is exactly where this type of loan for your business appears. If your financial needs end up exceeding $35,000 to $50,000, you should consider this loan.
Gone are the days when you would have to pay for equipment for your business on your own. Now, you can turn to equipment loans to cover this particular issue. Regardless of whether you need new laptops or powerful servers for your office, equipment financing is the best solution for you. Usually, the payments are set on the expected lifespan of your purchase.
In today’s ever-growing market, small business loans are ideal because they not only help to protect your business from the risks of bankruptcy, but they also help it to grow in the future. To ensure that you receive approvals for business loans, you should create a strong business plan and research the potential lenders properly and the various types of loans that they offer.