Need a Small Business Loan?

Small business loans are available from a variety of sources. There are banks, savings and loans and lending companies in the private sector that make loans to small businesses. There are also some public entities that are involved in financing for small businesses. One such source is the Small Business Administration (SBA). The SBA is an independent federal agency that assists small businesses in various areas. One area of assistance is financial and as such it is a source of loan funds for small businesses. There are three different SBA loan programs geared toward different kinds of small businesses. Each functions in a different way but each provides a means of financial assistance for small businesses.

The first program is the SBA’s Business Loan program. SBA has various partners is the community known as Lenders, Community Development Organizations, and Microlending Organizations. The SBA defines the parameters for the loan program and guarantees the loans which are actually made by their community partners, the various lending institutions. The guarantee means that the federal government will repay all or part of the loan in the event of a default by the small business borrower. The small business owner should contact the SBA to learn the terms of this and other programs.

A second program involves the Small Business Investment Company (SBIC). These are public-private businesses that represent an investment partnership between the public and private sector. These business entities can borrow funds for venture capital financing through the federal government at low interest rates. The purpose of these investment companies is profit and to share in the success of the small businesses that they invest in and help grow.

The third component of the SBA’s small business financing program is called the Surety Bond Guarantee Program (SBG). This program provides financing by guaranteeing bonds for small contractors to bid on projects that they normally wouldn’t be able to bid on. The surety is the SBA’s guarantee to cover a portion of the loss if there is a breach of the contract.

These SBA programs help small businesses obtain funds that they might not otherwise obtain without the guarantee by the federal government. The government is assisting them by organizing lending sources and by assuming part or all of the risk of borrower fault. They are, in effect, shifting the risk of default from the lending institution to the federal government. These programs help small businesses grow and give them business opportunities they would not otherwise have had without the guarantee of the federal government.

Small business owners should contact the SBA to see what programs and funds are available. Funding is based on appropriations and may change from year to year.

Bank Loan Online and Small Business Finance in the US

A bank loan online generally refers to funding provided by a bank that can be accessed through an online application. Online applications usually only take a few minutes to complete and are analyzed by the bank within a couple of days. Bank loans typically do not require as many documents as a small business loan, but banks may require applicants to provide personal financial statements and credit histories along with the purpose of the loaned funds.

Banks that offer online loan applications usually specify the requirements, interest rates, terms of payment, and any benefits of the loan to help individuals decide if a particular loan is available and beneficial to them. This information saves the time of potential applicants and banks. A bank loan online application may also offer the option to print the application to be completed and mailed or faxed to the bank. This method ensures that the applicant’s personal information is not transmitted over the Internet and cannot be stolen by another individual.

Banks with online loan applications usually offer additional benefits to approved applicants. Individuals can view their loan details, such as interest rates, balance, and amount owed, from an online account that is set up when the applicant accepts the bank’s loan. The bank may also allow borrowers to pay their loans through a secured online system, receive monthly statements via email, and view tax statements online.

Individuals looking for small business finance US are usually referring to financing options available to small businesses in the United States. There are many government agencies on the federal, state and local levels that aim to assist small businesses with financial issues.

The largest source of small business finance in the United States is the Small Business Administration (SBA). This agency provides loans to small businesses that have been denied by traditional lenders for financing. The most common loan provided by the SBA is the 7(a) loan. In order to qualify for this loan, a business must employ fewer than one hundred employees and submit all necessary documentation. The requirements for start-up and existing business differ slightly, but both require certain business and personal financial documents as well as a business plan. The SBA does not provide loans directly. Instead, it has a guaranty program, which means that the SBA will guarantee a certain percentage of a loan provided by a lender in order to minimize the lender’s risk of loss. To apply for an SBA loan, business owners must compile all necessary documents and ask for a loan from a lender who participates in the guaranty program.

Most states and a growing number of cities also have financial agencies that work much in the same way the SBA does. Many of these agencies, including the SBA, run websites that allow business owners to access information on funding options, current news, management advice, and common business laws and terms.

Small Business Financing Options – Know What to Expect!

So you have made the decision to start a small business franchise or home based business… now, how do you pay for it? As any rational individual understands, albeit contrary to what many internet “opportunities” would have you believe, any legitimate business requires capital: either cash or credit. As recently as a few years ago, obtaining funding to cover business start-up and operating costs was as simple as going to your local bank and getting a loan. However, due to the current economic conditions most individuals and small businesses are not able to qualify for large loans due to more stringent lending guidelines – banks just are not lending money like they used to. As a result, many would-be entrepreneurs are finding they must forgo their small business plans, put them on hold or become very creative at finding alternate means of financing. This article will provide a cursory overview of some basic methods business owners have used in order to fund their enterprises.

Depending on the small business plans you have in mind, you will most likely need some type of start-up capital along with your ongoing operating budget. Even small franchise opportunities are beyond the financial means for most individuals without assistance. Too little funding will virtually ensure either the immediate failure of your business, or will lead to you going out of business in a short time due to a lack of required operating income. Unless you are one of the fortunate ones in a position to have all of the needed investment capital liquid, meaning you have immediate access to the money, you will have to borrow money, either from people you know or from outside sources. Even if you are cash rich and have ready access to the required funding, it may still make fiscal sense for you to borrow, if possible. For the sake of this brief article I will separate the funding sources into personal and outside sources. I am writing this under the assumption that you already have or will have an approximate estimation of the nature of your desired business and how much capital you will require to realize your vision. Also, it goes without saying this article is not meant to provide in-depth financial advice. This is solely my opinion and I would strongly encourage you to make any financial or business decisions only after doing thorough due diligence.

In order to finance your business plan you may be able to raise the money personally or borrow money from people you know. This will probably be a more viable option if you do not need a large amount of money. On average, small business franchises usually require $10,000 – $30,000 to start, while you can start some small franchise opportunities and home businesses with as little as $2,000 or even less. Fast food franchises normally start around $100,000 or much more. You will almost certainly – unless you are in an extremely dire financial situation – be required to invest some of your own money in order to obtain additional financing. Individuals will probably be unlikely to invest in your business if you have not shown the same commitment. Even if you don’t have the money readily available in the most obvious places such as a savings or checking account, entrepreneurs frequently use available credit in the form of credit cards, money in retirement accounts including 401K savings or borrow against your 401K or house with a home equity loan or line of credit. If you are planning to approach family, friends or business partners to borrow, or are looking for a loan from outside sources, you should plan on preparing a business plan.

If you are unfamiliar with what goes into creating a business plan, you may find sufficient guidance online or from your local library. Any commercial lending institution (e.g. your local bank) and even family or friends will most likely require a formal written business plan. A business plan essentially details the nature of your business, including a strategy, risk level, expectations of profit, an overview of how you will operate your business and more. An informal plan may suffice if you just need a small loan from a friend, but plan on having a detailed and comprehensive plan if requesting a sizeable loan from a lending institution. Bankers will expect you to fully explain what the money will be used for: why you require the requested amount, when you can reasonably expect to repay the loan, etc. Do your homework ahead of time and be prepared!

You may need to seek professional guidance in this area especially if your plan is unusual or excessively complex, but otherwise you may be able to get by with a pre-formatted business plan template or even follow an existing business plan from another company. If you are looking to start a small business franchise you can likely use borrowing guidelines provided from the company. One of the benefits of franchise-type businesses is they give you a “cookie cutter” type format for what has proven to work for others, especially in regard to investment amounts. Regardless of the nature of your business though, lenders will take into account numerous factors when considering your plan. Request sufficient financing to allow you to operate your business as you have budgeted, but not an excessive amount or your application may be denied.

The author hoped to provide some insight and suggestions as you seek to fund your new business. This will hopefully provide some direction as you continue to do your homework on making your business ownership dreams a reality. From a personal standpoint you should look to use some combination of liquid funds, credit cards, retirement savings or possibly a home equity loan. If you need additional financing, consider approaching family, friends, business partners or commercial lending institutions. Regardless of where you plan to obtain the funding, plan to prepare a thorough business plan. As mentioned above, if you are starting a small business franchise you may be given investing guidelines to follow. No matter what type of business, however, prepare to provide potential lenders with a clear and complete picture of your business strategy, risk and repayment timeframe.