Getting a small business should be high up on every small business’s to – do list. Running a small business cost a lot of money, and many times the funding that owners have set aside does not cover the unexpected costs that will pop up. If you’re unable to cover those costs, you put your business in danger. This is where a small business loan can really help.

Small business loans are really hard to get

In spite of the fact that everyone says that you need to get a small business loan, the undeniable truth is that small business loans are notoriously difficult to get. The Small Business Association, or the SBA, applies extremely stringent rules any lending institution that they back for loans. This means that if you’re a business that’s just starting out, it could be really difficult for you to get funding through them. Luckily, there are different types of small business loans available. You essentially have to go with the ones that best fit your financial situation. Find our list of small business loans that are grouped by Business financial situation.

You have Stellar Credit

If you’ve got Stellar credit, you should be able to qualify for an SBA backed bank loan. This is the most difficult small business loans he gets, but once you do get it the terms are excellent. In order to qualify for this type of loan, you need to make sure of the following:

  • You need to have a credit score that’s a minimum of 680. Keep in mind that this is the absolute minimum.
  • You’re going to need to prove to the bank that your company has had at least two years of continuous operation.
  • You’ll need to show that your business has a minimum annual revenue that ranges from between 50000 and $150,000. Make sure that you get that information from your accounting before you even sit down at the table.
  • You’ll need to ensure that you have the ability to pay back the loan easily. Banks need to be confident that you’ll be able to meet the payment each month, so you’ll need to present financial statements that show that your income is at least 1.25 times the amount of your operating expenses. Keep in mind that this amount will need to include the amount that you have to repay each month for the loan. The 1.25 amount is usually used just a baseline that banks use. Many banks actually insist that you exceed the “1.25” requirement.

You have decent credit, you only need a small amount and your company is not very big.

If you don’t quite meet the threshold for SBA bank loans, but you still have relatively decent credit, you’ll probably want to pursue a loan with a microlender. Microlenders are nonprofits that extend short-term loans to small businesses. You should be aware that these loans rarely exceed $35,000, so they’re more for use for short-term stop-gaps in business expenses. They’re extremely useful for small businesses that need to get hold of quick funding.

Your credit is not that great.

If your credit is not that great or for whatever reason you’re unable to qualify for other types of small business loans, you may want to consider an online lender. An online lender could be a great option for a small business that needs to get a hold of money quickly. Unlike traditional banks which take a long time to approve your loan before getting you the money, online lenders can get you your money in as little as 24 hours.

On the flip side, online lenders have huge annual percentage rates, with the average for an online loan frequently going as high as 108%. If you intend to go this route, make firm plans with your accounting and finance department to make sure that your loan is paid off as swiftly and aggressively as possible.