As a small business owner you may require a loan to cultivate commercial enterprise growth on your small business to thrive and prosper. However, going yourself through the business loan process can be intimidating and complex. Primarily, you have to know all the requirements in acquiring a small business loan, and you then have to look for a small business funding solution that fulfill your needs.
Wise business owners explore the requirements and terms of the available small business funding options. And there are many different types of small business loans to choose from. Based on the lender, some can be a better choice for your small business as compared to others. Every lending product will have its own qualifying criteria, terms, payment schedules, benefits and drawbacks.
What Actually Is Required?
The standard sources of small business funding includes banks, the SBA and credit unions; however the small business owners are looking for the alternative lenders to get the funding they need with some more customized solutions.
Here are some of the primary small business loan requirements with each lender:
In keeping with the Bloomberg, banks ask for excellent credit, excellent credit background plus collateral. Basically, in case you are in a position wherein you do not require cash, then you will make the grade. Banks stiffened their lending requirements after the credit disaster of 2008, and have not changed them since. They focus their loan products on large businesses, which make the approval nearly impossible for many small business owners.
Loan Requirements From Bank:
- With the flexibility of time the loan can take almost 30-60 days to process.
- Require excellent credit rating as well as credit history.
- You need to have been in business for at least three years and feature documentation to prove your financial credibility and stability.
- The bank requires a business plan. They need to know the whole lot about your business, marketing plan, and your tax and bank data.
- Collateral, or valuable assets, is required for them to take in case you default on the loan.
Small Business Administration (SBA) Loan
The Small Business Administration (SBA) is a government agency that can be helpful for many, but once more you should be able to meet their requirements and you need to be organized that the process will take even longer as compared to with a bank. The SBA provides several loan products; general purpose 7(a) and 504 loan applications, for unique functions and business requirements. The loans cover start-up expenses for a business, expanding your business or cash flow to keep a business running easily. The SBA does not lend the money; but in fact connects the borrower to their lending partners.
Loan Requirements From SBA:
- You will need good credit and collateral
- You may need to wait up to 90 days or more to acquire the loan
- Your resume to take a look at your business experience
- SBA require a detailed business plan
Credit unions are similar to the banks; however are privately owned by their customers in a nonprofit status. They provide small business loan products comparable to a bank.
Loan Requirements From Credit Union:
- A detailed business plan, excellent credit rating and collateral is required, even though the bar may be set a bit lower than most big banks
- You have to become a member of credit union. This means opening accounts with them and meeting their member qualification
- The loan processing time is normally 30-60 days
Alternative lenders are the leading way that majority of small business owners find a lending product that fits their financial needs these days. Alternative lenders offer several funding programs including small business loans with the focus on speed, flexibility and easy qualification process.
Loan Requirements From Alternative Lenders:
- With online lender you can apply online by filling out online application
- A couple of months of bank statements
- The loan will be process in a couple of days
When looking for funding for your business it’s way important to take some time to learn the small business loan requirements from various lenders. There are several small business funding options available; however some are best suited for your requirements as compared to others.