Operating your own
business can be financially challenging and draining for virtually anyone who
wants to get started. Because the funds to rent or own a brick and mortar
facility can be a big strain on the small businessman budget, the need for new
finances can be a huge barrier in being successful. This is because building up
a business in today’s environment requires significant amounts of finances,
during the start up and years after.
1. Reasons for Borrowing a Small
Business Loan
To prevent a new or existing business from folding prematurely, the small
business man may decide to borrow a small business loan. Borrowing a small
business loan may be essential for a number of different reasons so it is
important for the owner to determine what purpose or purposes they need this
financing for. If you want to know what 3 things this loan can be used to do,
you will need to make sure that you are reading the actual terms of these
loans.
2. Four types of Loans Offered by the
Small Business Association (SBA)
To determine what the money can be used for after it has been approved, you
will need to consider what type of loan that you have requested. Because the
SBA offers at least 4 different types, you will need to pick and choose in
advance which some small business loans evans co types will suit you. The four different types
that are currently being made available via the SBA are as follows:
1. 7(a) – loans that have been set aside for those who need a loan that is
common flexible and basic
2. Microloan program – loan amounts that have been set aside for small loan
amounts – Normally, applied for approval by both existing companies who are
growing and new business ventures
3. Equipment and Real estate – loan amounts that have been set aside for larger
long term amounts
4. Disaster loans: loan amounts that have been set aside for low-interest rates
used for disaster (can be used from machinery to real estate).
3. Application Approval Dependent on
Several Different Factors
If you want to apply for a small business
loan, you need to do your
research first. Because these loans are only approved when the business owner
meet certain types of criteria, the owner needs to make sure that they are
prepared in advance to meet them. It is also important to note that this agency
will require specific documents for the loan before it can be approved. For
instance, if the small business owner has been in business for quite some time,
this agency may ask for information and supporting documentation as back up
proof and the financial statements that shows exactly the status of the present
business venture. There are a few things that these agencies representatives
will need to know about the business to ensure the company is eligible for the
loans that they are applying for like business owners’ personal
credit score, Must have a history of being in business at least 2 years, and
Security for the loan based on the loan type.