You’ll typically want to get the business loan that offers you the best terms. But other factors, like funding speed, may matter to your business and different funding sources may be better in certain instances than others. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs. If you need to finance large equipment purchases, but don’t have the capital, an equipment loan is something to consider.
Many startups, however, are too young to have an established credit score, and financial institutions must rely solely on the applicant’s personal score. Startup founders who are unable to qualify for a business loan may have better luck applying for a personal loan. Not only is the application process often less rigorous than for business loans, but personal loan qualification requirements are also generally less robust.
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Generally speaking, better credit history and business health lead to lower interest rates. Many new online lenders have shortened the application process and don’t require a business plan, but keep in mind that these lenders often charge higher interest rates. There are a number of factors that lenders consider when determining how much you can get on a business loan. Lenders want to reduce risk as much as possible, so they review your finances and business plan to make sure you’ll be able to pay your loan back in full and on time. As with online lenders, banks can also offer business lines of credit that you can borrow from as needed. You can often borrow anywhere from $1,000 to $500,000, but limits will vary depending on the lender and your financial credentials.
Sally Lauckner is an editor on NerdWallet’s small-business team. She has over a decade of experience in print and online journalism. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Refinancing can be a good option if your business can qualify for lower rates and save on borrowing costs. Young companies may have a harder time securing a loan because they don’t have a track record.
Can You Have More Than One Business Loan?
These loans are generally offered by online or alternative lenders and have less rigorous qualification requirements than imposed by traditional financial institutions. What’s more, these loans are often characterized by a streamlined online application process, fast approval and funding within one to two business days. Credibly offers a wide range of business loans for bad credit—working capital loans, business lines of credit and merchant cash advances, specifically. What’s more, new businesses may also find it easier to secure financing because Credibly only requires businesses to be in operation for at least six months. Although you’ll likely find it tougher to get approved for a small business loan with bad credit, it’s possible.
The process and instructions for turning in an application will vary between lenders. It could mean setting up a phone interview or going to a bank branch. Details about business owners, such as personal info of anyone having more than 20% How Can I Get a Business Loan to 25% ownership of a company. The amount you can borrow for your small business will vary based on a number of factors, including the type of financing you pursue. Once you have selected your lender, you can begin the application process.
These loans can be a good option for your business if you’re looking for competitive rates and long repayment terms. Term loans are what most people think of in the context of business borrowing. With online business term loans, business owners complete an online application process and can receive an approval decision within minutes. Funding speeds ultimately depend on the borrower’s bank, but cash is often available in as few as two days after approval. Ultimately, interest rates depend on the lender, type of loan, loan amount, borrower qualifications and other factors. Fast business loans often come with higher interest rates than those from traditional lenders—up to about 100%.