3 TYPES OF SMALL BUSINESS LOANS: BANK, SBA, ONLINE
The economic environment and banking / financing regulations can make it difficult for merchants and business owners to obtain small businesses loans. The more money one asks to borrow, the more difficult it is to find a solution. Companies with sound business strategies and financial history can still borrow money for working capital.
Banks and similar financial institutions typically offer the lowest interest rates, and many are established as trustworthy lenders. It may, however, be difficult to obtain a bank loan. Most financial assistance offered are in the form of secured business loans to those who have good credit.
Another way to find a small business loan is through the Small Business Administration (SBA). The SBA reports directly to the President of the United States and can direct you to banks that offer loans guaranteed by this federal agency. You will have the advantage of approaching banks specifically interested in lending to small businesses. In the fourth quarter of 2009, banks made 14,386 loans guaranteed by the SBA. Interested businesses should contact the SBA office nearest to them, which can be found on the agencyâ€™s Web site â€“ sba.gov. Banks granting SBA loans are placing increased emphasis on business plans, cash flow and profit forecasts in deciding whether to lend. It is also dependent upon how well-funded the agency is. The SBA also can refer businesses to free counseling centers to improve their performance.
ONLINE LOAN SERVICES
Another source for business loans is the Internet. There are many sites where businesses can seek alternative lenders to standard banks and financial institutions. One such site is Funding-Zone.com, based in New York City. Each online lender provides specific types of loans. Fees and interest rates vary as well. While interest rates are higher than that of a bank, it is less than those of credit cards. It is often easier and more convenient to qualify for a loan from an online lender than from a bank.