Commercial lending blog in Houston, TX

Small Business Start up Loans

What is Small Business Start Up Loans ?

If you have planned to start a business, it is certain that you would have something on your pocket in order to get off the ground and know the full potential. But, there are lenders and banks that render most weight to elements like in annual revenue and business with things that a new business can’t point to on small business loan applications.

A startup business loans is a type of financing that aims particularly on startup with little to no business history. Now, you can find a lot many varieties of new financial processes and business to new business owners viz: crowd funding, friends and family, business grants, business credit cards, and SBA micro loans.

This is where the startup business loan comes in handy. These loans are made to help startup businesses know basic operating things and expenses such as staffing, equipment, and inventory. These things usually needed to be placed prior to a business starting to generate revenue and make things possible.

Different Options for Startup Business Loans:

SBA Microloans

This program is mostly the conventional startup business loans on the list. The SBA microloan program offers small businesses with a large amount while the small sized business startup loan with small and less substantial startup cost to bear. Even if with this, the programs aren’t actually loans issues by the Small Business Administration. Rather, these loans make the ultimate decision of which startup businesses makes fund out of.

Business Credit Cards

Business owners with less than six months in business must consider getting business credit cards to cover the startup costs. Even if this is not a conventional startup business loan, a business credit card can grant you limits you can borrow when you need to cover large expenses. So, as long as you pay off your balance each month, you don’t have to be afraid of higher interest rates that you carry.

Small Business Grants

Small business grants serves to be a great way of raising money for the startup business; who don’t want free money. However, small business grants from govt. organizations and non-profit organizations can be challenging to secure, as many small business across the country do apply it. Further, some grants are reserved for some type of businesses such as the businesses that operate in particular communities, non-profits, and mission oriented businesses. Even if these grants are not a conventional replacement for startup business loans, they are worthy applying if you think you have a shot at receiving one.

Friends and Family

When more traditional small business startup loans aren’t available to your new business, you can turn to friends and family to raise initial funds. Now, there are many successful businesses who have built off the back of generous friends and family members, but this financing process is very risky for startup owners.

Crowd funding

Crowd funding is another creative funding process for starting business loans when other loans don’t make sense. This method lets you raise capital from online campaign mostly through dedicated platforms. Here you have to set a particular amount of capital where users will have to donate money if they feel inspired to do so. Unlike debt financing or equity, you do not have to pay interest or give up ownership to the funders.

Equipment Financing

To speak of, banks are usually conventional known for their lending opportunities. With the number of startup businesses starting at a peak scale, the conventional loan doesn’t seem to be a good option. Now, banks have strict small business lending standards and their offering is only available to established businesses. Here, still you can work with the banks to secure the equipment financing.

Personal business loans

There are lots of small business owners who access financing through personal loans. They do it through the growing number of online lenders. However, like credit cards, personal loans can have higher APRs, mostly for bad credit borrowers. Now, personal business loans can sound the best option for borrowers with strong income and excellent personal credit.

Take  a startup loan to gear up your business success

If you are building a small business, know that it doesn’t have to be a difficult task. Rather you just have to lend yourself a financial cushion. Now, getting access to the capital you should focus on hiring buying equipments, increase inventory, lease office space, hire staffs or simply cover monthly expenses while you grow.

Also, you can find lot many financial options to select viz: business credit cards, business line of credit, equipment financing, SBA loans, short term loans, and so forth. No matter the type of startup loan, you just have to have some extra cash and fewer headaches.

Who Qualifies to get Startup Business Loans?

For any small business startup, there is not one option that covers the entire financing options for the startup owners. So, the various methods to adapt are: crowd funding, friends and family, small business grants, business credit cards, and SBA microloans. Now, there are many new and young businesses that qualify for a startup business loan.

The most crucial key elements in all of this small business startup financing option will be the personal credit score. The higher the score the better chances to qualify for the personal loan business, business credit card, and SBA microloan.

Your eligibility for a more alternative start-up business loan like friends and family, crowd funding or grant will depend less on your credit score and more on the detail of your business like your business model, your customers, your communities, and many such things.

How Do You Apply for Startup Business Loans?

If you have planned to apply for new business loans, you must consider the method of financing you do apply to. Here is a breakdown of what to expect with each kind of startup business loan. Now, SBA micro loan will usually have a high intensive application procedure, where many documents will be needed and processed and the time for this would be at most few weeks.

Business credit cards have a very simple application procedure that requires “social security number” or federal tax ID. The application process here depend on the grant you apply for. The creative funding options such as crowd funding or friends and family doesn’t have conventional business startup loan application and so will depend on your unique funding conditions.

How Do Small Business Startup Loans Work?

Have you recently started to grow your business and already feeling lost about the funding options? If yes; the world of business financing can be lot confusing; mostly when the first timer business owners strike it out on its own.

Now, getting capital in the form of startup business loan is challenging and with no proven business history to show up, the start-up is the riskiest type of business to fund upon. However, there is nothing to be stressed as you can find lot many varieties of small startup business loan available for the startup owners. You only have to check them out and consider which one reflects better output to stick best for your business.

Take an Advantage of Loans to Meet the Requirement!

About SBA 7(a) Loans:

Loans are insured by SBA which is known Small Business Administration in U.S to entrepreneurs in order to meet their requirements in different sectors.  But everyone could not take its benefits; there are some important aspects where users can take its benefits. There are some key factors which can be taken onto consideration while granting the loans to entrepreneurs and other people. These factors may cover over all profit of the concern along with its ownership part whether it is public or privately owned.

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WANT TO START YOUR SMALL BUSINESS – GRAB SBA 7(A) LOAN INSURED BY THE SBA

Little to know about the SBA 7(a) before you start

Small Business Administration (SBA) is a government agency in the U.S. that assists the small business owners and their small businesses by providing small business loan. SBA aims at strengthening the US’s economy by helping a small business to grow. Small business loan refers to an amount given to an aspirant who wishes to start a small business. Business owner can use the small business loan for an existing small business, to start a new small business or to finance an existing small business and for the activities that may require cash in the future. In other word we can say that entrepreneurs need capital for conducting day to day business.

SBA 7(A) loan –Make your dream come true

There are different SBA loan programs out of which SBA 7(A) is the prime one that offers small business loan to the existing small business or to start a fresh small business. SBA 7(A) loans can be used for variety of purposes and the SBA is responsible for setting the upper limit of the interest rates that can be charged on the SBA 7(A) loan by the banks. Maximum interest rate on the SBA 7(A), in turn, depends upon the market rates. It changes as the market rate changes. Upper interest rate on SBA 7(A) loan is majorly dependent on 3 factors-the base rate or prime rate or SBA peg rate, duration of the term of the loan, which may be lesser or greater than 7 years and the size of the loan.

Who can approach SBA for SBA 7(A) loan?

To gain the benefit of acquiring SBA 7(A) loan, a business must be small as according to the definition given by the SBA, should do business in the U.S., should have reasonable equity investment, must have used the other financial resources plus the personal assets before obtaining financial help and should be able to present the need for the SBA 7(A) loan. Also, person seeking the loan must not be default for any existing debt obligation to the U.S. government. The loan applied must be used for the right business purpose.

Are You All Set: Quick check on the documents

A loan applicant is probably asked to furnish his/her personal details as about his/her background, his/her address, names that he/she uses his/her educational background and criminal record, if any. Prior criminal history is not necessary disqualification. Special committee make the final decision. He/She also has to produce his/her business experience to assess his/her efficiency in the business he/she has suggested and acquiring loan for. He/She should be able to submit prior years business financial statements. projecting the financial statements, profit and loss, cash flows and balance sheet. Most of the time, applicant is required to produce his/her personal and business income tax returns from last 3 years. Other documents may include business credit report, financial and bank statements and some other legal documents like business licenses and registrations required for to conduct business, Articles of Incorporation, copies of contracts with any third parties, commercial leases and franchise agreements.

What is the typical cost for SBA 7(a) Loan

  • $70,000 to $350,000 are the typical SBA 7(a) Loan size.
  • Loan amount for typical of $350,000.
  • For 10 years for Interest & Principal repayment term,
  • Monthly payment $3,929.80, Interest rate 6.25% APR including fees 7.73%.
  • The most typical rates are 6.25% to 7.25% interest rate is variable and based on Prime Rate plus 2.75% to 3.75%.

Your SBA resource Specialist can advise and suggest the various other options and exceptions are available.

So Are you ready to choose between 44 business loan programs ?

APR starting from 5.49%

Pre-approve your loan now

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