You’ve heard the phrase, “It takes money to make money,” and if you’ve ever contemplated starting a business, then you should know just how true that expression is.
Launching a successful startup or maintaining an existing enterprise requires capital, and sometimes lots of it.
Launching a successful startup or maintaining an existing enterprise requires capital, and sometimes lots of it. In fact, according to a study cited by the Small Business Administration (SBA), the average cost to start a business from scratch is over $30,000.
Fortunately for all of you entrepreneurs and seasoned business owners that are looking for that money, lenders offer business loans to well-qualified applicants.
But being “qualified” isn’t nearly as difficult as one might think. To obtain a business loan from a traditional lender (i.e. a bank, credit union, or private source), business owners need only prove that they are serious about their endeavor and that they’ve put a significant amount of thought and effort into making their dream a reality.
The key to qualifying for a business loan is making yourself look invest-worthy. If a lender sees the potential for success in an applicant, then they’ll also notice the potential for repayment and profit as well.
There a few types of commercial business loans that you should be aware of:
- Private loans
- SBA loans
- Business cash advances
Private business loans refer to those that banks, credit unions, private companies, and collaborative lending groups originate. These arrangements tend to be reserved for those with good credit scores and well-constructed business plans. SBA loans are those offered by the government’s Small Business Administration (hence the acronym SBA). Finally, business cash advances are the payday loans of the corporate world. They’re designed to give companies access to quick cash that must be repaid in a relatively short amount of time (usually six to 18 months).
Most business loans are originated for amounts of between $5,000 and $150,000. The duration of these borrowing opportunities spans from one or two years to upwards of 25. The term depends entirely on the needs of the applicant and on the willingness of their chosen lender.
Interest rates on business loans vary, and often depend on the type of financing sought. SBA loans, for instance, carry very competitive rates, whereas business cash advances can be a bit steeper.
If you’d like do some more research, please navigate to our frequently asked questions and articles. We also cover business-related news, which can be helpful to those looking for new developments in law, interest rates, and industry policies.