If you need a business loan to manage the imperative daily tasks, you must be exploring the lending industry. Businesses with more than average annual revenue, the fair credit score, and stellar credit history can get a small business loan easily. Some business owners are in the dire need of business loans, but they are reluctant to apply because they think the lenders will reject their application because of below than average income. Facing this dilemma and running a small business in this particular situation is no less than a challenge.
What is the solution?
Fortunately, with the passing day, the lending industry of America is trying its best to bring small business closer to the simple and instant funding. Your credit revenue is only one stroke, many other factors complete the remaining picture.
Before we explore those factors and multiple funding options, let us explore what it means to have a low income.
What does it mean by low income or credit revenue?
Most of the lenders set the eligibility criteria as per the incoming cash flow of the borrower. Usually, it is eight to twelve percent of the business annual revenue. If your annual revenue ranges from $25,000 to $150,000, you have nothing to worry about, as most lenders offer business loans to businesses that have at least $50,000.
But the income is lower than that, then you must explore funding options that are offering loans to businesses with annual revenue of less than $50,000. Instead of getting rejected from the lender afterward, you must check the eligibility criteria of the potential lenders. Usually, it is mentioned on their official website.
With the rise of alternative lenders, a wide range of business loans is available for low-income earners and entrepreneurs. Don’t lose hope just yet! Other than income, alternative and traditional lenders consider many other options as well.
What other factors does the lender consider when giving out small business loans?
The lending criterion of the bank varies from the lending criteria of an alternative lender, still, the criterion of all lending companies revolve around the following factors:
- Credit Score
- Outstanding Debt
- Cash Flow
- Credit History
- Time in Business
- Valuable business and personal assets
- Strategic Business Plan
- Ability to offer the collateral
Rather than beating yourself up because of the low income, as a diligent business owner, you should work on each of the above-mentioned factors. Don’t let a single flaw ruin your chances of loan approval. Each factor has its significance. So start doing your homework, prepare your business loan, and apply for one of the following small business loans.
Best business loans for small businesses with low income
Some lenders offer custom made a loan to low-income earners and some offer term loans with a relaxed criterion. But if you don’t qualify for those, you can take advantage of the following funding options:
- Small Business Administration (SBA) Microloans
If you are hunting for the best small business loans, it does not get better than an SBA loan. This lending institution offer loans to startups. In addition to this, these loans are also available to small business with lower than average annual revenue.
An SBA loan is the perfect loan to stabilize the financial position of a small business. A business owner can get up to $50,000 and the interest rate on this amount ranges from 8% to 13%. Take advantage of this golden deal and apply away!
- Short-term loans
A low-income earner can have access to $2,500 to $25,000 through a short-term loan. As the name says that these loans are short term so the repayment terms of these loans are shorter than the traditional ones. You can repay the loan over three to eighteen months.
If used wisely, a short-term business loan can act as a stepping stone towards consistent and stable annual revenue. In addition to this, if you manage to make all the repayment on time, the lender will report this behavior to the credit bureaus. It had long-term benefits; in the future, you can get a business loan at an affordable rate.
- Equipment Financing
Wouldn’t you be over the moon if we tell you that you don’t have to worry about the cost of the necessary new equipment for your low-income business?
Let Equipment Financing take care of it.
If you apply for the equipment financing, the new equipment itself will act as the collateral. Saving you from the trouble of offering separate collateral. Now that lender has a guarantee from your side, he will offer you relaxed financing terms. There is no simpler way to access money for your equipment than this!
The lender is all set to offer you money or lease the equipment after looking at your financial history, cash flow statements, and annual revenue. This is just to make sure that you have enough money to purchase the equipment.
Update your gadgets with Equipment Financing!
- Invoice Financing
If your business falls under the category of the B2B business, you should apply for the invoice financing.
Here the lender offers you cash in exchange of the pending invoices. You can get the 80% of the cash and when the customer pays the invoice the lender returns the remaining amount. To get back in the game, invoice financing is the best funding option for low-income earners or entrepreneurs with low-income generating businesses.
Think these business loans can financially benefit your small business? Head over to the official website of the Merchant Advisors, and apply for the business loan of your choice! For more information, tips and tricks to generate more income, follow us on Facebook and Twitter (@Onlinecheck). If you have any question, feel free to call us on our toll-free number at (833) 827-4412; we will help you every step of the way.