What is an asset based loan? An asset-based business line…
Sacramento Small Business Loans
Small businesses are important in both rural America and in the big cities because they are what keep the markets competitive. Today, many college graduates are looking for something new and exciting to be a part of, and business startups can be just that. If a business can be very beneficial to the local economy in a place like Sacramento, CA, then banks and investment firms are usually willing to give it the cash infusion it needs to grow quickly. But getting a small business loan isn’t always so simple because banks and other lenders want to know that they’re lending to a reliable and sustainable business that will repay their loan more likely than not. So before you apply for a loan, make sure you’ve done your homework on the preparation and application process.
Take A Good Hard Look At Your Credit
Before you do anything else related to applying for a loan or even deciding which one you want, you need to know what you have credit-wise. Your credit score is just a number that reflects how you’ve been maintaining your current debt or if you’ve been paying your bills on time, but your credit report is a complete record of that. What you should do first is get a copy of your business’s credit report and see if it’s accurate. If it has errors on it, getting those removed could boost your credit score. If your credit isn’t looking good, you should start making changes at your business to fix it. If it is good, you’ll have a lot more loan options available. But whether it’s good or bad, or even if you have little or no business credit history, you need to go over it before this next step.
Choose A Secured Or Unsecured Business Loan
There are all kinds of business loans out there, some of which are backed by the SBA, and others which are independently issued by the banks. But essentially they all fall into the category of secured or unsecured loans, and each has their own advantage. Here’s what you can expect with secured loans:
1. Secured loans use your assets or other property as collateral by pledging to the lender that if you don’t repay the loan, they can seize those assets
2. Because those assets are able to guarantee the lender payment of their loan, they usually will approve the loan for those with lower credit
3. Secured loans usually have longer terms and lower interest rates
Unsecured loans are a bit different:
1. Unsecured loans are made without collateral and are simply backed by your signature agreeing to repay them
2. Since these loans are riskier for the lender, your credit score will usually be a much bigger factor in whether or not you’re approved, and they’ll usually need to see other financial information as well
3. Unsecured loans usually have shorter terms and a little higher interest rates
Either kind of loan could positively or negatively impact your credit score depending on whether you make your payments on time. And while some loans are easier to get approved for than others, it’s still wise to make sure you’ve prepared your business and loan plan.
Get Your Documents Ready
If you’re unsure what you’ll need to do to convince the bank or other lender to approve you for a loan, a professional accountant or consultant can usually give you advice. But basically you need to find your financial statements from your business bank account, have your tax payment documents handy, show payroll information and expenses you’ve had in the last year, have information about your business insurance and the property it operates from and other documents that show that it’s managed to pay it’s bills. They also usually want a well-written document explaining what you’re going to use the loan for. Banks don’t always want to know what your projected earnings are, but they do usually want to get a sense that your business is moving in the right direction.
Some loans have quick approved times while others will require you to wait a little while to get your assets appraised or to do a thorough credit check. But usually once you sign your loan contract, the funds will be on their way. Just make sure you understand all your usage terms and repayment obligations before you sign anything.