Entrepreneurs use small business loans as a way to start and grow their companies. These loans can be used to help cover day-to-day expenses, purchase equipment, or stock up on inventory. Business Loans can be tricky to obtain if you don’t know much about the application process. For those who have never applied for one before, it can be hard to know what kinds of loans there are or how to get one.

The process doesn’t have to be complicated. Once you know what you need and how to get it, obtaining a loan becomes much easier. Let’s take a look at the different types of business loans and the essential steps to getting one.

Different Types of Small Business Loans

Sometimes the only thing holding back a great idea is the lack of funding. Small business loans are designed specifically to help owners and creative thinkers bring their ideas to fruition. There are many different types of loans and ways to get funding, some of which include:

Small Business Administrative Loans

This is a grouping of loans that help business owners get fixed assets and working capital. Certain requirements must be met to qualify for some of these loans.

• All other financial options exhausted
• A for-profit business
• Business in the US
• Equity from invested money or time

Some of the most common loans granted are:

• 7(a) loans- financial help for businesses with specific requirements
• 504 loans- Long-term loans with fixed rates. These are usually used for purchasing equipment and real estate
• Microloans- Mall loans of less than $50,000 to help start a business or encourage growth

While these loans are not funded by the agency itself, it does match lenders with businesses to help them get the funds they need. This method comes with the benefits of more competitive terms, counseling, lower down payments, and occasionally, no collateral needed.

Other ways to obtain funding:

• Crowdfunding
• Raising capital through online platforms, allow you to create a campaign for people to donate. Campaign times and donation amounts vary, but if done well, it can raise enough money to cover costs and other expenses.
• Family
• If you don’t want to worry about repaying a loan to the bank, you might consider loans from friends and family instead. Small business owners regularly use their own finances to get the business off the ground. They usually ask for small personal loans from friends and family when it isn’t enough.
• Credit Card
• Business credit cards are another option for fast cash and everyday operations. If you keep up with the payments, the card with help you build credit. This is a great way to help you qualify for a loan in the future.
• Microlenders
• Microlender loans don’t come from a banking institution. They are typically from individuals or nonprofits and are easier to get if you have a lower or newer credit score.
• Grants
• Some federal and private organizations offer small business grants to help cover start-up costs. The grants are usually tailored to certain types of businesses, depending on what organization is funding them.

How to Get a Business Loan

The requirements for each specific lender will not all be the same. There are a few steps you can take to help smooth the way, no matter what you choose.

1. Establish your reason for the loan- A lender who is about to invest a large amount of money in you will want to know why you need it.

2. Consider your eligibility- You will be asked to disclose:

• What is your cash flow?
• What is your credit score?
• How long have you been in business?
• What collateral do you have?
• Are you part of a growing industry?

3. Gather necessary documents

• Personal and business tax returns
• Business licenses
• Articles of incorporation
• Personal and business bank statements
• Profit and loss statements
• Financial statements
• Business plan
• Building lease

Being prepared ahead of time will make the loan process easier, taking some of the stress out of the situation.

Business Loans for Start-Ups With Nufi

Whether your business is having financial trouble or you just want to keep it running smoothly, Nufi is here to help. As a financial services company, we aim to provide businesses with profitable solutions that suit their unique needs. Our expert data analysis and problem-solving help you find a solution for even the most challenging issues. We provide short and long-term small business loans to help your company achieve its goals. Contact us today if you have questions or want to learn more about how a small business loan can help you!

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