Follow 3 key steps to identify the best small business loan for you, one that’s right for your specific needs and financial profile.
Step 1: Examine Your Goals
To determine the best types of business loans for you, examine your goals and why your small business needs funding.
- Purchasing a piece of machinery?
- Need funding to get through the slow months?
- Renovating your storefront or office?
- Jumping on a hot business opportunity?
Depending on your unique goals, certain types of business loan financing may be better for you than others. For example, if your objective is to purchase seasonal inventory you intend to turn in 90 days, it’s not the best decision to take out a 10-year loan. Such loans for small businesses shouldn’t outlast the life of an investment.
In other instances, some of the best loans for small businesses are long-term options that have smaller monthly payments and lower business loan interest rates. The tradeoff for these perks is more stringent qualification requirements and a slower time to fund. If you need to act on a business opportunity fast, you may be better served with a short-term loan or advance.
Step 2: Find the Best Small Business Lenders
When researching the best small business lenders for you, your selection will likely come down to two variables: your business’s financial profile and how quickly you need funds.
You can apply for a small business loan with one of the following types of lenders.
When applying for a small business loan through a bank, small businesses go through a multi-step process that can take as long as 6 months.
Business owners are asked to complete an application and meet with a loan officer in person. Sometimes you’re required to present a proposal for how you intend to use the funds – and how it’ll benefit your business.
When applying through a bank, their small business loan qualifications are high. If your credit score is below 660, you’re just starting out or your revenues are modest, your chances of securing a small business loan from a bank or credit union are slim.
Alternative Business Lenders
Alternative business loan providers have simplified and streamlined the application and approval process. Applying for a small business loan online can take minutes.
Plus, with alternative business lending, the approval and funding process is shortened from weeks to days. In fact, depending on the type of online small business loan you’re applying for, funds can be deposited the same day you apply.
Alternative business lenders and marketplaces like Fast Capital 360 that offer small business loans online are also willing to work with more small business owners. If you don’t have a lot of years as an entrepreneur or you’re working to repair your credit, you could still qualify for funding.
Step 3: Estimate What You Can Afford
The next step to identifying the best small business loan for you is to estimate what you can afford.
Determine how much capital you need to achieve your goals and how much you can afford to pay back. To do this, take a hard look at your cash flow. Compare your cash flow against the loan’s payback requirements.
Next, factor in any returns you expect to receive as a result of your investment. This is a great way to make sure you’re not taking out too large (or too small) of a loan.
Estimate How Much You Can Borrow