Are you looking for a small business loan to finance your struggling business? No matter what pushes you to go for this option, always make sure you are aware of the details before you apply for a loan. Some of these loans have stringent conditions attached which may make it inconvenient for you if you apply without doing the necessary prior research.
Always ask yourself whether you have a legitimate need for the loan. Minimizing risks should be your priority at this stage and online sites such as Fundera can help you to analyze the small business loan that you are applying for. An important thing to note is that you must have a strong business plan. Moreover you should have a plan to spend the loan amount which will leave a favorable impression on the lender. According to a survey conducted by Lending Express, 61% percent of borrowers were profitable after acquiring just one loan. Some of the best and quick loans available for small businesses are mentioned below.
SBA Express Loan:
The Express Loan is one of the two types of SBA loan available for borrowing. It has a response time of 36 hours and allows you to borrow up to $350,000 with a payment schedule of ten years and an interest rate of 4.5 to 6.5 percent. If you are interested, here is how you can get an SBA loan. It requires less documentation for the loan to get processed compared to traditional loans. Also, the time duration for approval cannot exceed 90 days which compared to traditional loans is a lot quicker.
The interest rate cannot exceed more than 6.5 percent which is suitable for a small business. One more thing to note is that this loan offers you flexibility in terms of usage since you can use it for a variety of purposes including buying machinery, inventory, etc. It can also be used to pay off debts. Since the period for the repayment is long you do not have to worry about it for now.
Peer-to-Peer (P2P) Loan:
The P2P loan is becoming increasingly popular since it removes the role of the middleman, the financial institution, along with the eligibility requirements being less stringent compared to other loans. The P2P lending works through online platforms which connect borrowers and lenders. Each P2P loan is divided among several investors which diversifies the risk. The advantages of P2P platforms are that the process is relatively easy compared to going to the bank and it is transparent since it is done completely online. The interest rate is also lower compared to the loans you may get from the banks.
Microloan may be suitable for you if you are seeking a loan with a low-interest rate and short repayment time. You can get a loan up to $50,000 with a repayment time of 40 months. Microlenders lend with the motive of helping the disadvantaged rather than seeking profits. Non-profit microlenders like Kiva operates in more than 80 countries and offer interest-free loans. SBA also offers several microloans which operate through non-profit organizations such as the SBA Community Advantage Program which approves loans up to $250,000 with a maximum repayment period of 72 months.
Business Line of Credit:
This loan primarily operates like a credit card and you can use it repeatedly without reapplying for a new loan. The line of credit has a range from $5000 to $150,000 with credit being approved within 36 hours. When you apply, the lender approves you for a maximum borrowing amount, for example, $50,000. You can borrow up to that amount and repay as long as you do not exceed that amount and make the necessary minimum payments. Interest rate is charged monthly and they depend on the terms agreed between you and the lender. The loan is flexible in terms of you can use it for a variety of purposes but you may have to offer collateral in some cases.
OnDeck Capital offers loan terms up to $500,000 with interest rates starting at 9% which is suitable for prime borrowers. Owners who have a credit score of 680 and above are eligible for this loan with a repayment period up to 36 months. OnDeck also offers a line of credit worth $100,000 and you can qualify for both these loans.
However, you lose some of the flexibility offered in other small business loans as terms agreed at the beginning is to be followed even if you repay the loan early. The terms make it appealing for small business owners since the repayment period is long enough for you to make small payments even if you require funds for extension purposes.
The loan offers a line of credit up to $250,000 which is suitable for businesses needing to make monthly payments. The application process is fast with funds available in one to three days with interest rates starting at 1.5% and costs getting reduced if you repay the loans early. Kabbage offers great flexibility to borrowers with monthly payments which are suited for online lenders. The repayment period of 18 months allows businesses to fund huge projects by giving them more time to repay the loans. To qualify for Kabbage, you must have a credit score of 550 and above with at least a year in business.