Indianapolis Small Business Loans
If you own a small business, the chances are high that eventually you’ll need financing. When considering your options for a small business loan, it is important to determine exactly what your requirements for the loan will be and how likely your business will be to qualify for the individual loan type. It is, of course, also important to understand all of the available options and loan types that exist. This can be a process that involves understanding a fairly wide range of different financing types.
The many different types of financing available to Indianapolis small businesses
Because businesses often require large amounts of capital for a huge variety of different needs, small business financing contains a considerably broader range of options than simple consumer financing. While most small business owners will look for financing from a bank, getting a bank-financed Indianapolis small business loan is far from the only option available.
Although this article will primarily focus on what is needed to secure an Indianapolis small business loan from a traditional lending institution, it is important to understand the multitude of alternate financing options that exist.
Small business credit cards
One of the most popular ways that small business owners finance their operations is through the use of a business credit card. The pros of going with a business credit card are the same as they are for a personal credit card. The approval process can often be nearly instantaneous. And small business owners can often find enticing introductory offers, including sign-up bonuses and balance transfer incentives. What’s more, it may be possible to find cards that come with essentially no interest payments so long as the balance is always paid off in full.
Business credit cards also come with far higher spending limits. This can make them a viable option for small business owners who need small-to-medium standby credit facilities. However, there are downsides with business credit cards as well. First, they usually require strong to excellent credit for approval. It turns out that the same kind of personal credit rating that can get you a business credit card with a $25,000 limit is likely to also get you a small business line of credit that can easily be 10 or more times that amount.
But most importantly, business credit cards can end up costing huge amounts of money if the balance is not paid off in full every month. And unlike other forms of financing, negotiating with credit card companies can prove to be almost impossible.
Mezzanine financing simply refers to loans that are backed by equity shares in the company. This can be a strong backup option for those businesses that may not have adequate collateral available for the loan amounts they need or that suffer from poor credit. Mezzanine capital also typically comes with considerably higher interest rates.
Asset-based and invoice financing
For businesses with valuable assets, like real estate or capital equipment, asset-based financing can be one option for securing high-dollar-amount financing. Another type of financing that depends on the business’ assets is invoice financing or factoring. In this case, money is loaned against future payments from invoices that have already been created, that is, against future cashflows.
The benefit of both of these types of asset-based loans are that they typically do not require the business owners or the business itself to have excellent credit or an impeccable track record of repayment of loans. This type of financing can also result in high-value loans in a relatively short timeframe, sometimes within just a few minutes.
Angel investors are a good option for businesses that are newly formed or otherwise plying a risky trade or unproven business plan. The upside with angel investors is that they can provide risky startup ventures that those companies would be unlikely to secure from more traditional lenders, sometimes in amounts up to millions of dollars. The downside of angel investors is that they often require huge returns on capital and are frequently primarily interested in payment through equity stakes in the company.
While turning to angel investors can be a viable means of last-resort financing, it is generally recommended that those business owners who can go with more traditional lending sources do so.
Bank financing and other traditional Indianapolis small business loans
For the lender who qualifies for bank loans or loans from other traditional lending institutions, these forms of finance can often be the best option. However, small business owners should realize that there is an often-lengthy process that one must go through in order to obtain this kind of financing. Much like applying for a mortgage, obtaining bank financing for a small business can be a labor-intensive and challenging process. But there are a few things that you can do to maximize your chances of securing bank financing.
Know your personal and business credit score
One of the best things you can do to ensure that your business will qualify for a bank loan is to maintain both an excellent business and personal credit score. In order to do this, it is of course necessary to use a wide variety of credit types and make sure that you make timely and full payments on them. However, one point that is often overlooked by new business owners is that completely separating business and personal funds is an important step in making sure that your business also maintains a solid credit score. Intermingled personal and business funds can quickly lead to credit problems for your business, including an inability of the business to establish any kind of independent credit history.
Formulate a coherent proposal
As a general rule, you can never be too detailed about how the funds that you are requesting from the bank will be used. Having a detailed budget that lays out in great detail how each dollar of the loan will be used and what future budget, revenue and profit projects look like will greatly increase your business’ chances of being approved for a loan.
A bad credit small business loan might be what your business needs to get to the next level. If you need capital for a business expansion or even to take care of payroll, there are options available to you. At Delancey Street, we can help you with everything from merchant cash advances to small business loans. We have provided funding for as much as $2 million.
Getting a Small Business Loan in
Getting a small business loan may be easier than you think. Even with a bad credit score, it’s possible to secure a loan.
We pride ourselves on fast approval processes. Further, we can provide funding in about 48 hours.
If you need to apply for a small business loan, we can help you. Regardless of your business type and cash flow structure, there are solutions that are available to you.
The Application Process
Applying for some loans can be tedious. Traditional bank loans require a significant amount of documentation. Banks want to see a business plan to determine how you’re going to spend the money. They also want to see financial statements, a balance sheet, and more. If you don’t make the package of documents look professional, they may not take you seriously.
You also don’t want to wait weeks to get a decision.
We have a simpler solution. We can get your application processed quickly so you can begin to make improvements to your business.
Review Your Credit Score
Lenders want to know what your credit score is. They’ll review your credit history to determine if you’re capable of making the payments. If you have a low credit score, it can make it harder to secure a loan.
The good news is that Elk Grove bad credit small business loans are available. Even if you don’t have the best score, you can still get the funding.
You need to find out what your credit reports say. Order copies from the bureaus to find out if there are errors. Then, you can work at making improvements to your credit score. This can be done by clearing up delinquent payments and making timely payments to all of your creditors. It could take months to improve your score but it can be done.
Lenders may look at your business and personal credit score. If your business credit isn’t that good, they may expect your personal score to make up the difference. Traditional banks may not be willing to work with you at all if your scores are too low. This is why it’s important to know where you stand before you start the loan paperwork.
Read the Fine Print
The fine print of a loan agreement is important. It will talk about your APR, various fees, and your loan repayment schedule. Determine what the cost of a small business loan is going to cost you. The higher your APR, the more you’re going to pay in interest.
A loan agreement is a legally binding contract. Be sure you know what’s in it before you sign. It will ensure that you get the money that you need for your business without making any bad decisions.
When you get ready to apply online, consider a few details. For example, how much money do you need for your business? How much can you afford to repay on a monthly basis? This will make it easier to make sound decisions for your business.
The application process is easy. Approvals come fast. When you’re ready to fund your business, you can apply online with us today.