Guide to Getting a Business Loan for Professionals

As a professional, getting a business loan can be a smart decision that will help you scale your business to the next level. Educating yourself on the different types of loans available is a critical step to understanding what type of financing is best for your business. Biz2Credit is here to simplify the entire business loan process and walk you through the steps you will need to take in order to apply and get approved for a business loan.

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What Type of Professions will this Guide Cover?

In this guide, we will be discussing several common professions and the types of loans that are most relevant to their business needs. We will specifically be covering:

Many professions have similar operational needs to the specific roles that we will cover within this guide. If you work in a different profession, you will likely find a substantial amount of overlap between your business model and the professions we will be exploring in this article. Of course, you can always get assistance by speaking to a funding specialist who is trained in your area of business, or hiring a financial advisor who can consult with your business specifically.

What are the Key Types of Business Financing for Professionals?

Term Loans:

Term loans are provided to borrowers as a lump sum to be repaid on a set schedule. These types of loans offer low-interest rates and can be used to satisfy several business needs, making them attractive to professionals who meet eligibility. Term loans can be used to buy new equipment, purchase inventory, meet payroll obligations, and much more. For a more in-depth analysis of term loans, the advantages and disadvantages they can offer, and to know if a term loan is right for you, check out this helpful blog article on Small Business Term Loans.

Business Line of Credit:

A business line of credit is a great way for businesses to acquire funds to assist with any cash-flow issues or other financing needs. A line of credit allows borrowers to tap into a pre-determined amount of money at any given time. What makes a business line of credit so attractive to professionals is that you only pay interest on the amount of money that you end up utilizing, not the entire loan amount. For a thorough explanation of Business Lines of Credit, read the Ultimate Guide to a Small Business Line of Credit.

Working Capital Loan

Another popular financing option for professionals is a working capital loan. These loans are designed to increase a business’s existing working capital. If you are a professional looking to finance the day-to-day operations of your business, such as paying employee wages or making rent payments for your office space, a working capital loan could be the right financing option for you and your business.

Merchant Cash Advance

A merchant cash advance is an attractive financing option for businesses with steady credit and debit card transactions. A merchant cash advance allows businesses to receive the funds of estimated future income, for a small fee. These can be attractive options because the fee model reflects the business's revenue. For example, if sales are slow and income dips, so will the payments to the cash advance company. Unlike a loan, a cash advance does not have fixed payments or a payment schedule, so it can be especially helpful if a business has periods of peak activity followed by leaner times.

Small Business Administration (SBA) Loans

Small Business Administration Loans, or SBA loans, are financing provided by the SBA specifically for small to medium-sized businesses. The SBA offers several different professional loans that allow you to choose the loan option that is most appropriate for you and your business at any given time.

7A Loan:

The 7A loan allows businesses to secure federally guaranteed loans of up to $5 million. By applying through an approved lender, this funding can be utilized to purchase equipment, real estate, fund building construction or renovation, and more. The maximum length of a term loan depends on who is providing the funding but will typically be 25 years for real estate, 10 years for equipment, and 10 years for working capital or inventory loans.

SBA Microloans:

Microloans offer financing of up to $50,000 and so, they are a great option if you are a professional looking for a smaller-sized business loan. Microloans can be used to cover a variety of business-related expenses including needing to fix broken machinery or cover the advertising costs for a new product. Typically, microloans are granted as startup funds for new businesses or for working capital for existing businesses, so keep that in mind when considering if a micro-loan could be right for you.

SBA 504 Loans:

504 loans allow businesses to access capital for fixed assets, including equipment, real estate, and machinery. Typically, these loan amounts are close to $20 million and are processed through SBA-approved lending partners. 504 loans are a popular low-interest financing option and aim to help small businesses purchase things such as essential office supplies or to offset the costs of hiring new workers.

Different Business Loans for Common Professions

Franchise Owners:

Buying a franchise is a great option for someone looking to start their first business. You have the benefit of operating a business model that has been proven to be successful, time and time again. As a franchisee, you also have the benefit of having very flexible financing options, which can help you get your business the funds it needs at a faster pace.

1. SBA Loans

If you are a franchisee who is looking for a business loan, an SBA loan should be one of the first options you consider. Their low-interest rates and flexible repayment scheduled make this an attractive financing option but be prepared for a very competitive application process. The SBA Franchise Guide is also an excellent source of information about purchasing a franchise and offers additional information to prospective franchisees.

2. Franchisor Funding

When you purchase a franchise, you may have the opportunity to receive financing directly from the franchisor. This arrangement may come with a higher interest rate, so do not assume that just because the franchisor is offering it, that it is the best deal. Be sure to research all loan options before committing to a franchise loan. This type of financing is frequently seen as a "last resort" but will be open to most applicants who meet the credit minimum.

3. Alternative Financing

If you are looking for financing with a quick turnaround time and larger approval amounts, you may want to consider an alternative lender. You can also aim to get financing from several different sources for different needs. For example, a traditional loan might finance the real estate purchase for your franchise, but you could work with an alternative lender to cover your working capital needs.

Doctor:

Doctors often need additional financing for assorted reasons, such as malpractice insurance, covering the slow payout from insurance companies, financing expensive medical equipment, or even covering the costs of continuing their education. Thankfully, numerous loan types apply to the unique financial needs of a doctor. Check out this Success Story about a physician that was able to expand his California practice through a small business loan from Biz2Credit.

1. SBA Loans

SBA loans are the most common loan type for a doctor. There are several types of loans that you can choose between, and it will depend on what your specific needs are and what you want to accomplish. For example, a 504 loan can be used to cover assets that promote business growth and job creation, so if you are looking to buy new office space or purchase a new X-ray machine, the SBA 504 loan could be the right loan for you. Another type of SBA loan is a 7a loan. These can be used to cover short- and long-term working capital and to purchase necessary supplies. So, if you need to place large orders for medical supplies, such as syringes or personal protective equipment, a 7a loan could be exactly what you need.

2. Business Line of Credit

A business line of credit can be an attractive option for doctors. Doctors typically deal with insurance companies which means that the doctor will have to wait a certain amount of time before receiving the payment for the services they have provided to a patient. Because of this delay, doctors can have a substantial number of accounts receivable at any given time. Many practices will find it helpful to receive supplementary financing to help bridge the gap between receiving these delayed funds, which is where a business line of credit can be very helpful.

3. Equipment Financing

As a business owner operating a medical practice, you will likely need to buy substantial pieces of equipment such as x-ray machines, exam tables, or other large pieces of equipment. These will typically come at a substantial cost and consider applying for an equipment loan. This type of loan is favorable if you do not want to impact your cash flow, as the lender can use the equipment purchased as collateral for the loan.

For a deeper look into what a doctor needs to consider when financing their medical practice, check out this helpful guide from Biz2Credit on the Five Ways Doctors Can Get Business Loans.

Restaurant Owners:

Working capital is an essential resource for restaurant owners, as it can help with everything from payroll expenses to helping cover seasonal downturns. Luckily for restaurant owners, there are several financing options that can get you the additional funding you need.

1. SBA Loans

An SBA loan is an attractive option for restaurant owners because of the low-interest rates and longer repayment terms it provides. Specifically, an SBA 7(a) loan offers borrowers lots of flexibility and can be applied to a variety of needs. If you are looking to renovate your existing restaurant space, purchase a large piece of kitchen equipment, or even upgrade your point-of-sale system, an SBA 7(a) loan will offer you the financing that you seek.

2. Business Line of Credit

A business line of credit is a common loan option for restaurant owners as its funds can be put towards a variety of purchases. If you are a brand-new business, you will incur numerous costs associated with launching your business and a business line of credit will help ensure that you always have the necessary funds available. If you are an existing business that needs to purchase or upgrade your kitchens equipment, a business line of credit can help cover those expenses as well.

3. Merchant Cash Advance

A merchant cash advance can be a great option for restaurant owners who may not qualify for other types of loans. If you have a low credit score, a minimal operating history, and no collateral to offer, a merchant cash advance might be the best loan option for you. While they can be simpler to attain, be aware that they can cost more to attain than other types of loans.

Accountants:

Due to the seasonal nature of revenue for accountants, it is common for these professionals to seek funds to bridge the gap between tax seasons. Continue reading to learn more about which financing options are most appropriate for you and your accounting practice.

1. SBA Loans

The 7(a) loan program offered by the SBA is particularly attractive to accounting professionals as it has features that align well with the needs of an accounting professional, including its low-interest rate, generous repayment horizons, and flexibility in the use of funds. With a 7(a) loan, you are eligible for loan amounts from $5,000 to $5 million, repayment terms range from 5 to 25 years, interest rates start as low as 6.75%, and the approximate time for approval is six weeks.

2. Merchant Cash Advance

As more people pay for tax preparation services by credit card, a merchant cash advance can be a viable financing option for accountants. A merchant cash advance is usually granted through a credit card or debit card payment processor and is repaid with the proceeds from an electronic payment sale.

3. Non-Bank Lenders

Non-bank lenders, like Biz2credit, provide financing for accountants on an accelerated approval basis. Borrowers will also enjoy shorter approval cycles, lower credit score standards, and less paperwork than more traditional lending options. On the other hand, an accounting professional seeking a loan from a non-bank lender should expect higher interest rates and more fees associated with the application process.

Click here to read about a Texas-based accountant who was able to secure a loan through Biz2Credit to open a new business location in Houston, TX.

Lawyers:

It is common for lawyers to need financing to help cover business expenses during the beginning stages of starting their business. For lawyers, there can be an extended period between when they first start their business and when they receive their first check from a client. When this or other situations arise where they need financial assistance, there are several types of loans they may decide to seek out.

1. SBA Loans

SBA loans are desirable to lawyers as they have both favorable rates and terms for borrowers that are seeking term loan financing. Specifically, the SBA 7a loan program offers several features that align well with the needs of legal practices, including its high maximum loan amounts, repayment horizons, lower interest rates, and flexibility in the use of funds. SBA loans also offer borrowers flexibility on what they can spend the newfound financing on, including things like marketing, financing specific cases, or new business acquisition opportunities.

2. Working Capital Loans

The benefit of a working capital loan for your law firm is that both the borrowing and repaying processes are quick. If you do not want to plan for months and years of repaying, a working capital loan could be an excellent option for your law firm. If your law firm is looking for temporary financing to cover employee payroll, a working capital loan can be an excellent option.

3. Business Credit Cards

If you have a strong credit score and want to bypass a hefty loan application and an extensive credit approval process, a business credit card could be an excellent financing option for your law firm. High-interest rates and low credit limits can sometimes accompany a business credit card, but users typically enjoy the flexibility in spending that comes with this form of financing. If you are just opening your firm and expect an influx of smaller, start-up related costs, consider a business credit card for your needs.

Pharmacists

Independent pharmacies have faced their fair share of changes over the years. Between insurance coverage changes, strict government regulation, and competition with chain and online pharmaceutical distributors, pharmacy business owners have had to stay diligent to retain a loyal and steady customer base. Thankfully, there are several programs specifically designed for financing pharmacies.

1. CRE Loan

As a successful pharmacist, it can be a smart financial decision to purchase your own commercial space where you can conduct your business operations. By becoming your own property owner, you can cut out the overhead cost of rent. Additionally, when you decide to retire, your retail space can be rented out as an investment property.

2. Working Capital Loan

Quick and accessible funds are crucial for a pharmacist looking to operate a successful business. Having cash on hand will allow you to allocate funds to areas that will help you scale your business, whether that is in the form of hiring new employees, investing in updated accounting software, or purchasing new equipment. Pharmacists also have the advantage of being able to sell a wide variety of retail goods in addition to their standard pharmaceutical products. As a pharmacist, it can be smart to obtain a working capital loan that will allow you to take advantage of bulk or seasonal product pricing. Pharmacists also face the challenge of waiting for reimbursements from insurance companies. When these delays in cash flow occur, it can be smart to acquire a working capital loan to bridge the gap between funds.

3. Non-Bank Lenders

Non-bank lenders or online funding companies like Biz2Credit, can provide pharmacists with business loans on an accelerated approval basis. So, if you need financing quickly, a non-traditional lender and their shorter approval cycles, lower credit standards, and less paperwork could be exactly what your pharmacy needs. Reach out to Biz2Credt today and get pre-qualified for a business loan in just seconds.

Check out this inspiring success story from Baisley Pharmacy, a New York-based pharmacy that was able to make crucial improvements to its business because of a loan from Biz2Credit.

Gather Your Application Materials

Now that you have a better understanding of what type of loan would be best for your business, you will now need to gather the necessary documents that you need to apply for your desired loan.

There are varied materials you will need to submit to apply for a small business loan. Which materials you submit will depend on the type of loan you are applying for and with what lender. Below are the several types of documents that are always requested by lenders, so it is a smart idea to have them prepared and ready to submit once you decide what loan you want to apply for.

  • A detailed business plan.

  • Business and personal tax returns.

  • Business and personal bank statements.

  • Business financial statements.

  • Business legal documents, such as articles of incorporation, commercial leases, or franchise agreements.

One of the biggest lessons from this article is that no matter what your profession is, it is likely that there is a loan option that applies to you and your business. If you are interested in speaking with a qualified lending specialist, reach out to Biz2Credit to discuss the lending options available to you and your business. Click here to get in contact today!

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