What Biz2Credit Can Teach You About Business Loans and Financing
September 17, 2021 | Last Updated on: February 15, 2023
September 17, 2021 | Last Updated on: February 15, 2023
If you are a business owner in today’s climate, you may feel overwhelmed with the many financing options in the market. After all, every business is unique and will have different reasons for getting a loan at a given time. In this article, we will break down the top financing options for small businesses and how to select the right one for your current business goals.
At Biz2Credit, we help small businesses get funding fast by skipping the traditional lengthy paperwork and dreaded long waiting period for a decision. We understand how important flexibility is for a business owner, and that should go for your financing as well. In this article, we’re going to explain a few ways that Biz2Credit can help you with the business financing process.
The first, and simplest, way that Biz2Credit can help you with your small business finances is simply by giving you access to direct financing products that can be used in your business for many different purposes. Biz2Credit provides direct access to the financial products listed below, which means more security for your financial information and often a faster decision as well.
Term loans are what most business owners think about when they start thinking of business financing. A term loan has a fixed amount issued by a lender with a specified term and interest rate. Term loans are ideal for larger and longer-term projects, as this will typically require large funding up front and the flexibility of having a longer repayment term. However, with any term loan, you will be committed to paying a monthly amount, no matter how your business is doing or how that big project is going. Some popular uses for term loans are major renovations or buying fixed assets for expansions, such as equipment or real estate. You can apply for a term loan with Biz2Credit in just a few minutes.
How to qualify: 1) Your business has an annual revenue greater than $250,000 2) You have a credit score above 660, and 3) You must be in business for 18+ months.
Working capital financing is best for funding a business’ everyday operations and short-term operational needs. This type of financing offers flexibility in the amount and a shorter repayment term (vs term loans). Businesses that benefit the most from working capital are those with high seasonality or cyclical sales. Some popular uses for working capital financing are to hire staff during busy seasons, buy new equipment, and stock up on inventory during an unexpected closeout. You can apply for working capital financing with Biz2Credit in just a few minutes.
How to qualify: 1) Your business has an annual revenue greater than $120,000 2) You have a business bank account with a history of deposits and withdrawals each month, and 3) You must be in business for 6+ months.
If you are looking to acquire a new or existing commercial real estate property or make improvements and additions to those properties, then a CRE (Commercial Real Estate) loan may be what you need. Depending on your industry, you could use a CRE for office space, industrial buildings, retail/restaurant, and more. Like a home mortgage, the borrower is required to make a 20-30% down payment on the commercial property, and the lender will place a lien on the property. You can apply for a CRE loan with Biz2Credit and get assistance throughout the process from our funding specialists.
How to qualify: 1) The property is at least 51% owner-occupied 2) You have a credit score above 650 3) In business for 3+ years, and 4) Have ability to make a 20-30% down payment.
Now that you have a better understanding of the different financing options you can get through Biz2Credit, we hope you feel more equipped to apply for business financing. But if you still have questions, a Biz2Credit funding specialist will be able to help you sort through your options in a one-on-one consultation. That’s because at Biz2Credit we also know that business needs are not always clear cut and that business owners need some guidance along the way with making the best financial decision for their companies.
We work with small business owners who come from all different kinds of backgrounds, and we’ve seen a lot of creative and impactful ways that business owners are able to use funding to grow their companies. Here are some tips for using business funding that our funding specialists like to highlight to the business owners they talk to about financing.
At Biz2Credit we have extensive experience with all kinds of small businesses, from hotels and restaurants to salons, accounting firms, construction companies, and many, many more. Our expert funding specialists often spend most of their time working with one type of business, and we’ve surveyed them to get the most common recommendations they have for business owners in different industries.
Depending on your needs, there is a loan for any occasion. If you are starting a new medical practice, a term loan will be the best option in order to pay it off long term. To replace a piece of expensive equipment, equipment financing can be the best option as the loan is secured by the equipment itself, which means the interest rate and terms are typically good and the loan itself is easier to come by. These are just a few of the many viable loan options for doctors.
Several reasons for a gas station to obtain financing could be to stock up on inventory for the convenience stores, purchase gasoline in bulk to beat fluctuating oil prices or upgrade equipment to meet regulatory standards. Traditional options for gas station loans, same as for other small businesses, are Small Business Administration (SBA) 504 and 7(a) loan programs. But lending can be more than just the traditional loan. If you do not have the initial collateral to help secure the loan, you can look into securing an unsecured loan, line of credit, or merchant cash advance.
Although a rigorous process, an SBA loan is a popular choice to overcome cash flow issues that come from running a restaurant, as it carries the lowest interest rate due to the federal government’s guarantee. If you need to buy or lease equipment like a pizza oven or cooler, you can apply for an equipment loan that will hold what you buy as collateral, which means lower interest rates. To stock up on trendy ingredients, a line of credit can enable you to make the purchase without sacrificing cash flow.
To acquire fixed assets for expansion or modernization, such as purchasing or developing new properties, the conventional commercial term loan and SBA 504 loan program are ideal for their long-term, fixed-rate financing. The main distinction between the two is that the SBA loan will offer lower rates as it is guaranteed by the federal government but will have a more rigorous application process. Another option for the smaller hotel companies is the SBA 7(a) loan, but they must meet SBA’s size standards (considered small within the industry) and show a profit. For hotel owners that just need to cover minor expenses, they can apply for an unsecured loan that relies solely on the business’s cash flow and ability to generate profits, but rates will be higher.
If owners don’t have the initial collateral to secure the loan, they can look into unsecured loans but must be prepared for more stringent financial requirements such as a higher credit score. Those willing to offer up their salon assets and equipment as collateral can receive a line of credit up to the value of the assets. Traditional financial options for hair and spa service companies are the (SBA) 504 and 7(a) loan programs, which has a lower rate with the backing of the federal government, but the borrower must meet the eligibility requirements and adhere to the SBA Standard Operating Procedures for loan underwriting. The main difference between 504 and 7(a) is the minimum and maximum amounts they can borrow, the terms of the loan, and the down payment required. To buy an existing salon business, they can get seller-carry financing, which is essentially negotiating the pricing, terms, and financing with the current owner. An advantage of this financing is that the owner can oversee the training of new staff during the transition period to ensure business success.
The most direct loan for a commercial auto loan is, you guessed it, a commercial auto loan. To get this loan, the owner must assess the financial status of their company to ensure they are in good financial standing. This step is crucial, so owners should always make sure their financial documents are up to date. Then they must design a good loan proposal, essentially a sales pitch, that explains why they need financing, the purpose of this vehicle, and the exact vehicle they need. The business’ credit score will be evaluated, as well as the value of the business assets should the owner offer that up as collateral.
The most common professional services financing option is traditional loans, which banks issue for expansion, build new facilities, and purchase new equipment. For professional services to get these loans, they may have to offer some sort of collateral or a well-defined revenue forecast. SBA loans are similar to traditional loans, but approval is sometimes easier to get, which makes this option more accessible to professional services businesses. To avoid the strict regulations and requirements banks have, these businesses could get funding from online and alternative lenders. They can seek lenders that specialize in professional service loans or are backed by investment groups or private investors whose interests are in their specific type of business. This could mean more favorable terms versus the traditional banks who consider them difficult to lend to.
If a medical practice is looking to purchase or rehabilitate a building, a commercial loan could be the answer with a 15 or 30-year fixed-rate loan, and a 20% down requirement. For startup practices, they may qualify for SBA funding which offers attractive rates and terms. For practitioners who just want to have cash readily available to ensure smooth operations, a business line of credit is the optimal choice. Once a lump sum amount is agreed by the lender, the money is ready for use, and the interest rate is only charged to what the borrower spends.
Here’s how Biz2Credit was able to help this Georgia-based perfume and cosmetics wholesaler expand his business through inventory financing.
There are lots of other business lending options for small business owners in different industries from these. We’ve put together more recommendations in this helpful set of how-to financing guides.
We’ve talked a lot about the fact that lenders will evaluate the business before deciding to provide financing. Biz2Credit is focused on helping business owners access financing on their terms: when they need it and in ways that lead to success. That’s why we’ve developed a set of resources and tools that business owners can use to improve their understanding of their unique financial circumstances, all available in our Business Toolkit. In this section we will do a deeper dive on the methods lenders use to assess businesses with the help of our Business Toolkit, specifically financial calculators and the BizAnalyzer Virtual CFO so you can determine your business’ financial health. This will give you insight into how your business is evaluated by potential lenders so that you know where you may need to improve your chances of getting loan approval.
Here are some of the tools we recommend business owners use while preparing for a loan or financing application so they can be on top of the way that lenders will evaluate their business.
Now that you have a good understanding of the top small business financing options, the popular ways other business owners use each kind, and a good sense of which kind of financing your business might benefit from, we hope you’ll turn to Biz2Credit for assistance with your business financing needs when you’re ready. With business toolkits like the financial calculators and BizAnalyzer Virtual CFO to check your company’s financial health, Biz2Credit is here to ensure you are set up for success every step of the way.
At Biz2Credit, our number one priority is helping small businesses across the United States. Whether through assisting small businesses with acquiring loans or providing them with timely and relevant news pertaining to their individual industries, we are here for small business owners. Stay in touch with us, apply for financing if you’re ready, or schedule time with a funding specialist to get a one-on-one consultation.