Business lines of credit are a great option for small businesses that face ongoing cash flow problems. When applying for a small business loan, you need to consider what your financial goals are and what an affordable repayment plan would look like for your business. Accountants can be an important source of advice for small business owners, according to Stephen Sheinbaum, CEO of Circadian Funding, which helps small and medium-sized businesses raise working capital. Business loans are one of the most common methods for entrepreneurs to obtain funding, and they generally provide access to more money than they could get by asking friends or family.
Required documentation often includes a detailed business plan and proof of security; comprehensive financial records, such as income tax returns, personal and business bank statements, loan history and a balance sheet; and legal documentation, such as franchise agreements, business licenses and registrations. Banks tend to offer the largest commercial loans from any provider, especially large domestic banks. Different types of lenders offer different ranges of loan amounts, with banks offering the largest loans and microlenders offering the smallest. To do this, your bank wants to obtain stellar personal credit scores, several years of profitability and a clean financial history for your company.
When it comes to wondering how much a small business loan costs, there are no surprises, heavier down payments, or confusing jargon. The next time you apply for a loan from your lender, you may be left with the amount you expected. There is no guarantee that you will be approved or that you will qualify for the advertised rates, charges or conditions. However, a loan calculator can provide you with a lot of other useful information, information that can help you make smarter, more informed decisions before applying for a loan.
It's not uncommon for very small businesses to have no formal business plan (or no plan at all), but you'll still have to spend time and effort developing a comprehensive business plan before entering a lender's office. In that case, the fees shouldn't affect the total amount you pay on your loan (although they could cause problems if you expected to use the full amount).
