Secure Funding Navigating the Baltimore Small Business Loan Application
Secure Funding Navigating the Baltimore Small Business Loan Application., All small business [owners, managers] [know,understand] the [possibility,probability] that at some point while in business they will [require,need] financing from an [outside,external] source. [Because,Due] to this, having knowledge about a small business loan application process can be critical to your company’s future.
This [white paper,guide, article,post] to small business loans is designed to help you understand your options so you can make the choice that’s best for your business.
Bank loans
Traditional lenders typically provide the lowest interest rates and as a result are the hardest to qualify. Nearly all banks small business loan applications will measure a business owner on several factors before lending granting a loan application:
- Credit. If your business is recently established, this could refer to the personal credit history of the borrower. For more established businesses this could refer to the credit history of the company only or a combination.
- Cash flow. Banks will examine your company history to see how much cash flow you had in the past and what you could be expected to earn in the future. Many will want you to meet a certain debt to cash flow ratio for a small business loan application.
- Management. The banks will want copies of you and your manager’s resumes. You may wonder what this has to do with a small business loan application but they use this to determine how much experience you have in the industry.
- Capital and Equity. This includes all cash on hand, equipment and any other physical assets your company could have.
- Collateral. Anything of value related to the company that might be used to back your loan. If you do not repay your loan, the bank will seize these assets.
These rather extensive requirements are what makes it possible for traditional lenders to make lower interest rate loans because after determining all of the above factors they can easily judge how much of a risk you are (More or less; if you recall the banking crisis caused by bad loans a few years ago) Sadly not everyone can meet these requirements, which leaves us out in the cold when we need a bank loan.
Summary: The bank you correctly deal should be the first place to start. They will work best for established businesses with good credit history and cash flow. They are particularly hard to find right now do to the aftermath of the banking crisis, and will take time to find and get through the application process and receive the small business financial help you need.
Small business loans from the SBA
If your small business loan application with your bank is turned down, the SBA should be one of your next stops. The SBA will guarantee loans for small business owners who the banks have rejected recently. In essence, if you have been denied a loan, the SBA will promise to repay the bank who lends you if should you fail to repay your loan. With this backing, lenders are a bit more likely to approve someone they have rejected.
To get approved you will need to supply the following:
-Statement of personal history, required for each principal applying for a 7(a) loan
-Personal financial statement
-Balance sheet and profit and loss statements
-Projection of income and finances
-List of names and addresses of any subsidiaries and affiliates
-Certificate of doing business
-Signed business federal income tax returns for previous three years
-Signed personal federal income tax returns for previous three years
- Personal résumé, including business experience of each principal of the business
-Brief history of the business and its problems, including explanation of why SBA loan is needed
-Copy of business lease
-Additional documents if proceeds will be used to purchase existing business
Summary: barrowing from the SBA is one of your best options in terms of price and accessibility. The downside is that it adds another layer to lending process (and a federal government layer at that), which means it can take even longer to get small business financial help. If you can afford to wait however, then it is well worth it. Currently small business legislation is stalled in the House and Senate, so funds may be limited for some time.
Cash flow based small business loan applications.
typically most banks will lend or supply small business loan application to a business depending on a variety of factors calculated from the small business loan application: Cash flow, time in business, personal experience of the proprietors, old tax returns and personal and business credit scores are all factors . This is good news if you have managed to keep a good or excellent credit score. If however, you have made mistakes , missed payments, or had to hold a high balance through an emergency then you will have problems getting financial help from a traditional lender.
There is actually a movement away from the emphasis on personal credit in the small business loan application process. This choice small business financing help may be the answer for quite a few small business owners who have been turned away by the traditional lenders.
How cash-flow-based commercial loan financing operates.
Small business loans may not always be the answer. Sometimes you will need more creative business financing such as Small business loan applications based on cash flow typically comes in the form of an advance. E.g. merchant cash advance. The lender will buy your business’ future credit card sales at a slightly lower amount and advance you the cash. Essentially, if you are anticipating to make $10k the lender will purchase that $10k for $8k. You have $8,000 to invest in your business and no monthly payments to make. The key to this being a workable option is naturally in the cost. Companies rendering honest small business financing in the form an MCA will also offer a discount on your credit card processing fees. This will help offset the slightly higher cost of an MCA equated to a bank loan.
Tags: Baltimore, Credit, Credit Card, Credit History, credit score, federal government, Good Credit, HUD Homes, lender, loan
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November 22, 2010 - 3:14 am
thanks for the info. that was a really good news how to have a excellent credit score.