Is the Average Small Business Loan Good Enough?


Jeffrey Bumbales

For many small business owners, financing is typically one of the most challenging parts of starting up and running the business. Many entrepreneurs may not have the money needed on hand when they want to get the business running from the ground up, and bank loans can be tough for brand-new small business owners to get.

If you don’t have the liquid cash you need to pay for various business expenses, there are both traditional and alternative funding sources you can tap into in order to help you get started. No matter what your business goal is, one of these options is sure to be the right fit for your small business.

Typical Funding Options For Small Businesses

The traditional way that small business owners have typically sought loans is through banks and large credit unions and similar lenders. While this is definitely a viable option, it usually comes attached with stringent lending criteria.

Banks usually want to see a number of things before they agree to approve a borrower for a small business loan, including:

    • Good credit score
    • Plenty of collateral and assets
    • Long business history

Even if all of these factors are in check, the application and approval process can be long and tedious. The application itself can be lengthy and cumbersome, with many small details required to be filled in. Once the application is submitted, it can take weeks before an answer is given about whether the loan has been approved or not.

Even if or when approval is granted, it can still take a while before any funds are seen. If you need money fast, these options aren’t very convenient.

Instead, small business owners have other funding solutions that can help them get the money they need quickly, and without all the hassle.

Alternative Options Available for the Small Business Owner

If you can’t afford to sit around and wait for the bank to approve and fund your loan, or if you just don’t meet all the strict requirements that banks request, alternative loan options are available for the taking. Here are a few of the more popular ones:

Business Cash Advance – When fast cash is what you need, a business cash advance can be the perfect solution for you. Even if you have bad credit, you can still be approved for this type of financing program. With a business cash advance, the lender loans you the money you request, and you pay it back by allowing the lender to take part of every day’s credit card sales until the loan is paid in full. In addition to the payments made, you’ll also give the lender his or her required fees.

Since the payments fluctuate according to how busy or slow business is on any given day, you’ll never run short on capital. You’ll get fast access to cash after an easy applicant process, and you don’t have any restrictions on the money you’re loaned. Use it to pay for whatever business need is called for.

Business Line of Credit – Anyone would find it extremely helpful and useful to always have money available to them when they need it. This is exactly what a business line of credit can offer. With this financing program, you are given a certain amount of money from which you can withdraw whenever you need it.

You can take out as much or as little as you choose without going over the specified limit, and interest is only paid on the amount taken out. After you pay back what you’ve withdrawn, you’re free to draw from the account over and over again. Even if you’ve got bad credit, a line of credit can still be approved.

Equipment Financing – Every type of business needs some form of equipment, whether it’s computers, desks, telephones, printers, tractors, cars, or anything else needed to run the business. But if money is tight, the equipment inventory can suffer. With equipment financing, you can get the money you need to buy the equipment you require.

In return for the loan offered by a lender, you pay it back in installments along with the lender’s fees. Unlike an equipment lease program, you are actually the rightful owner of the equipment once the loan has been paid off in full. Bad credit is OK, and no collateral is needed since the equipment itself acts as collateral.

Unsecured Short-Term Loans – A short term loan is much like a traditional term loan in that you are given a certain loan amount to pay for short term expenses. In return, you pay the lender back along with any interest rates tacked on to each payment until it’s paid off. The difference between this set-up and a conventional term loan is that the loan amount is usually smaller and the repayment term is much shorter.

You can get quick access to cash to pay for whatever needs are pressing, and there is very little paperwork to fill out. Because the loan is unsecured, you don’t have to come up with any collateral.

Let Credibly Help You Come Up With a Viable Business Funding Solution

Thanks to the advent of alternative loan options, small business owners who may not necessarily meet all the criteria needed to get approved for a conventional bank loan can still get the money they need for business purposes. A variety of funding options are available, and at Credibly, we help small businesses identify what working capital solutions are most suitable.

To meet your working capital needs for your business, contact today!