8
Where to Go To Start a Business? Conventional Bank Loans: Conventional loans being offered by various traditional banks typically offer preset repayment terms for both long and short term funding . Shortterm loan is frequently structured as a lineofcredit and ought to be repaid usually within 12 months. Longterm banking finance includes loans with repayment tenures which can extend for many years. SBA Loan Programs: SBA 7(a) ‘GeneralSmallBusinessLoanProgram’: It provides up to $5 million to begin a fresh business or support in the business operations or its expansion. The repayment terms vary between 7 up to 25 yrs.

How difficult is it to get a small Business Loan?

Embed Size (px)

Citation preview

Page 1: How difficult is it to get a small Business Loan?

Where to Go To Start a Business? 

 

 Conventional Bank Loans: Conventional loans being offered by various traditional                   

banks typically offer preset repayment terms for both long and short term funding.                         

Short­term loan is frequently structured as a line­of­credit and ought to be repaid usually                           

within 12 months. Long­term banking finance includes loans with repayment tenures                     

which can extend for many years. 

 

SBA Loan Programs: 

 

 

 

● SBA 7(a) ‘General­Small­Business­Loan­Program’: It provides up to $5 million                 

to begin a fresh business or support in the business operations or its expansion.                           

The repayment terms vary between 7 up to 25 yrs. 

Page 2: How difficult is it to get a small Business Loan?

 

● SBA 8(a) ‘Business­Development­Program’: Designed specifically to support             

socially as well as economically deprived industries, it offers up to $4 million to                           

businesses which produces goods or deliver services or up to $6.5 million to                         

manufacturing businesses. 

 

● SBA ‘Micro­loan­Program’: Offers loans up to $50,000 for startups (small                   

business) as well as its extension. Microloans are governed by ‘Non­profit                     

community­based organizations’, which generally seek collateral as well as the                   

business owner’s personal guarantee. The average microloan is about $12,000. 

 

Business­Credit­Card: Among the most frequent funding alternative available to                 

smaller companies is a business­credit­card. These are basically personal­credit­cards                 

bearing the particular business names, relying on the personal credit record of the                         

owner for credit limits as well as approval. Based on a US Census data report, between                               

9.6 % and 17.6 % of businesses with 50 or lesser employees, utilize a credit card to                                 

fund their business operations or its extension. 

 

Page 3: How difficult is it to get a small Business Loan?

 

As small industry owners are becoming more and more familiar with the advantages which only                             

Merchant Cash Advance options can offer, the merchant capital industry will eventually become                         

more competitive and consequently costs will persistently fall, which in turn will make this                           

industry an even more potent option for numerous upcoming businesses. 

  

  What are the Smaller Business Alternatives? 

 

 

 ● Merchant­Cash­Advance: Up­front cash funding is provided in lieu of a fixed                     

percentage of the future credit or debit card sales transactions. The automated                       

repayment adjusts automatically according to the daily sales volume. 

 

● Business­term­loans: Various alternative financers provide a factual business               

loan with a fixed date of repayment and preset weekly or daily repayments that                           

Page 4: How difficult is it to get a small Business Loan?

are on the basis of an assessment of the business returns. There is no                           

requirement of any personal collateral. 

 

● Revenue­based funding: Offers an instant capital infusion in lieu of a preset                       

portion of the future business income. Such services are being utilized by small                         

businesses which invoice their clients. 

 

 How do business loans work? 

 

 

 

In general, there are diverse uses for both the long term loans as well as short term                                 

loans. 

 

Long­term loans: Such types of loans are most often being used for asset purchases                           

funding: 

Page 5: How difficult is it to get a small Business Loan?

● Machinery 

● Equipment 

● Land 

● Buildings 

 

Short­term loans: Such types of loans are most often being used for funding business                           

operations: 

● Supplies 

● Inventory 

● Payroll 

 

Alternative funding can be accessed by smaller industries for any number of                       

purposes: 

    How difficult is it to get a small Business Loan? 

 The fact that most of the conventional bank loans are inaccessible by most of the small                               

businesses has in turn formed an acute requirement for the alternative funding options.                         

The chief distinction (between the traditional funding and the alternative ones) is that the                           

alternative funding assesses funding opportunities on the basis of the business’s                     

strength instead of the personal credit history of the business owner. Consequently, the                         

funding approval rates are comparatively on a higher side. 

Page 6: How difficult is it to get a small Business Loan?

 

 

Apart from the great accessibility aspect, the alternative funding options have been                       

structured relatively opposite to the conventional banking world. As a result, these                       

frequently offer features which are quite client­friendly such as updated and easy                       

application procedures, swift pre­approval, quick disbursement of funds and flexible                   

repayment preferences. 

 

Page 7: How difficult is it to get a small Business Loan?

Various types of alternative funding option include: 

 

 

● Merchant­Cash­Advance: Up­front cash funding is provided in lieu of a fixed                     

percentage of the future credit or debit card sales transactions. The automated                       

repayment adjusts automatically according to the daily sales volume. No                   

personal guarantee or personal collateral is required. 

 

Page 8: How difficult is it to get a small Business Loan?

● Revenue­based funding: Offers an instant capital infusion in lieu of a preset                       

portion of the future business income. Such services are being utilized by small                         

businesses which invoice their clients. 

 

● Business­term­loans: Various alternative financers provide a factual business               

loan with a fixed date of repayment and preset weekly or daily repayments that                           

are on the basis of an assessment of the business returns. There is no                           

requirement of any personal collateral. 

 

Businesses which don't possess any access to angel investors or venture capitals would usually                           

consider conventional bank funding options (though it’s relatively hard to avail such loans for the                             

new businesses) and the alternative funding options such as merchant cash advance.