Are Small Business Loans Right for Your Business?

Small businesses require unique flexibility when it comes to financing. The right small business loans can see you through a difficult season or secure essential supplies, while taking out loans for the wrong reasons can set you back indefinitely.

Here are a few guidelines to help you decide if you should be considering a small business loan.

Good Reasons for Taking Out a Small Business Loan

Is it time to expand?

Maybe the future is so bright your small business needs shades. If you can’t continue growing without more real estate or adding employees, definitely look at your business loan options. Having even a few years of a documented growth should help you secure a favorable rate.

Is it time for new equipment?

If your business relies on functional, up-to-date machinery or technology financing to remain relevant and productive, it makes sense to look at some of the small business loan lenders offer. Just make sure your increased productivity can reasonably cover the cost of paying back these sorts of loans.

Is it time to stock up?

Some businesses are seasonal by their nature. Summer is coming and the tourists are already trickling in, and you know if you had enough beach towels, sunscreen, or novelty t-shirts in stock they’d fly out the door. If you know what’s coming and wish to be better prepared, seasonal small business loans might be just the thing.

Is it time to begin building up credit?

You don’t want to borrow money just to borrow it. But a small cash loan now, while you’re in a good position to repay it, might be a good first step towards raising that credit score. Then, down the road, when you need a more substantial loan, you’ll have already paid off several smaller loan offers to small businesses like yours.

Even personal loans to start a business can become a starting point if you’re trying to qualify for the sorts of small business loans can complicate. You want to be particularly careful with these, however – there’s no point further harming your credit score by being unrealistic. Keep amounts manageable and payments consistent as you build your credit.

Recognizing Trouble- Small Business Loans

On the other hand, sometimes we need to take a hard look at the realities of business and separate entrepreneurship from recklessness.

Are you regularly falling behind?

Maybe your business model should have worked, but just doesn’t seem to be gaining traction, despite your commitment. It’s important to have dreams; I wish more people were like you. America is a nation full of risk-takers. But there’s no shame in recognizing when something’s not working. Take a step back and re-evaluate before going after another line of credit.

Have circumstances changed?

Sometimes unexpected events change the game or thwart our best-laid plans. If life were a fairy tale, we’d plow ahead no matter what the situation and things would work out magically in the end. Our struggles take place in live action, however, and sometimes circumstances change too quickly for us to come out on top – at least this time.

Are your eyes bigger than your stomach?

That’s what my mother always asked me when I was a kid ordering off the menu during our rare trips to a “sit-down” restaurant. She was worried that my “ambition” (or at least my appetite) was outpacing my ability to chew and digest everything that was coming. Usually, she was right. The same drive that allows you to become your own boss can push you to reach too far. It’s not always easy to tell the difference, but it’s worth having a long, serious talk with yourself before adding further debt.

If you’ve weighed the circumstances and decided it’s time to consider, we can help you find a business loan lender. We’re ready to help you sort through the different types of long-term business loans (or other types of loans) and connect you with direct lenders who want to partner with you. Just let us know.

Understanding the Different Types of Business Loans

If you’re a small business owner, or hoping to become one, you’re going to need business funding from time to time. They may be small business loans or something to help you cover your budget or tax obligations. You may have a good relationship with your local bank, or begin with a credit card while you get established and develop a credit history.

Whatever your situation, there are a variety of options for small business loans and lenders willing to work with you. Let’s look at some of the different types of business loans.

Traditional Small Business Loans

SBA Loans

An SBA loan is any type of borrowing backed up by the Small Business Administration. It’s usually worth looking into these first. It’s harder to qualify for an SBA loan than from many direct lenders, but the terms and interest rates are generally good.

Term Loans

These are similar to the sort of personal loan you might get for a major purchase or consolidating your expenses. They’re often used for new equipment or physical expansion. Repayment is scheduled at regular intervals for a set number of months or years, like a car or house payment.

Unlike a revolving line of credit, these are one-time loans until paid in full. Terms and interest rates are determined by your business and credit history, so they can be tricky for new businesses. Of the different types of business loans, this business term loans is easily one of the most common.

Equipment Loans

As the name suggests, these are loans taken out to buy specific, essential equipment financing for your business. In many ways they’re simply a variety of Term Loans. Because they’re designed for specific purchases, however, the equipment you purchase is natural collateral for the loan. This often helps you to secure a better interest rate.

Commercial Real Estate Loans

I’m betting you’ve already figured this one out. Substitute “real estate” for “equipment” above and you’ve got it. Commercial Real Estate Loans generally have great interest rates. Lenders can safely assume you’re not likely to run off with two acres and a small building one night if things start to get shaky.

Revolving Credit

These are most commonly compared to credit cards. Rather than taking out individual small business loans or other short-term business loans, your small business would have access to funds as needed, within approved limits. These are one of the most flexible of the different types of business loans. The trade-off is that interest rates are usually a bit higher than with other traditional types of loan. That’s why it’s often called a business line of credit.

If You’re Just Starting Out

The unfortunate reality for many entrepreneurs is that no matter how good their ideas or how solid their work, they’re starting off without a stellar credit history or extensive financial records. It almost goes with the territory.

Personal Loans

I know, I know – technically this isn’t a business loan at all, right? But it is an option for entrepreneurs still establishing themselves and needing the equivalent of a loan not dependent on the history of your business. While the interest rates will vary widely based on your personal credit rating, personal loans to start a business are sometimes your best option for getting a loan even with bad credit – making it surprisingly common among the different types of business loans.

Start-Up Loans

Like SBA Loans, these aren’t a distinct type of loan so much as a variation on any number of types. Business Start-up loans depend on your ability to persuade lenders of the viability of your business model and your short-term income potential. (Maybe you should show them this recent survey from CNBC!) They may also require personal collateral, making them comparable to Personal Loans.

Invoice Factoring

These aren’t traditional small business loans, although they do offer you some financial flexibility, especially if your business is largely seasonal. You sell invoices coming due in the near future to a third party, who gives you a percentage of their value immediately and assumes responsibility for collection. Needless to say, this reduces your profits over time, but it does give you the equivalent of other forms of credit shopping immediately.

How Can I Learn More?

We’re ready to help you sort through the different types of business loans (we’re happy to discuss business loans of any kind). We’re not looking to sell you anything. Loanry gathers some basic information and offers a few tools to help better determine your needs, then helps you find a participating business lender to secure a solution both of you decide is best. Once you’ve find a lender that meets your needs, the rest is between you and them.

Business Funding Programs for Veterans

So you are fresh out of the military after serving for a number of years? Now it is time to find just a regular 9-to-5 job and slog it out until retirement. Yet wait one moment. You want to start something new? Then you need to know more about business funding programs for Veterans.

What if you had a fantastic business idea for a product or service that companies or the public would love? Why couldn’t you go out and become the entrepreneur you always dreamed of becoming when leaving the service?

There are many veterans who have business dreams. Unfortunately, they may not have the finances at this point. They are instead concentrating on finding a new home and work opportunities. More often than not to pay the bills as they make the transition to a civilian lifestyle. Luckily, there are business funding options specifically tailored for veterans. Those might help you start and grow a business.

Here are 5 ways for veterans can get the financing they desire:

Angel Investment for Veterans

There are many angel investors who want to see veterans succeed in the business world. One such group, Hivers and Strivers. It seeks out recent graduates of military academies who are trying to create business start-ups as they need of early-stage financing. With this available option, veterans can get the working capital to fully develop their company’s operations. When working with the Hivers and Strivers angel investor, the company can invest amounts ranging from $250,000 up to $1 million.

SBA Veteran’s Advantage

The Small Business Administration offers the SBA Veteran’s Advantage program for military veterans, reservists, National Guard members, service-disabled veterans, active duty service members going through the Transition Assistance Program, and spouses of service members. This program offers to guarantee SBA 7(a) loans ranging from $150,000 up to $5 million that are approved for business purposes.

Business Funding For VetsLending Platforms for Veterans

Due to the abundance of lending options for cash loans online, veterans who are starting a business of growing a company may wish to find the investor that fits better into their company objectives. There are online lending platforms, such as Street Shares, that can help business-minded veterans connect with investors through an online auction process as you may be able to get a loan from $5,000 up to $50,000.

Leveraging Information and Networks to Access Capital (LINC)

The Leveraging Information and Networks to Access Capital is a program operated by the Small Business administration to connect veteran-owned businesses to the right nonprofit lenders. Veterans can find a range of real estate financing, small loans and micro-lending options as the loan amounts can go up as high as $5 million. You may also be able to take part in the SBA Community Advantage program or a SBA 504 loan program.

As a veteran, you aren’t locked out from getting the right loans to fund your small business venture. There are a variety of lenders out there waiting to invest in your products and services. To make sure you can get your company operating. In other words, before searching for lenders, think about your present finances. You have to place into the business, the amount of financing you need and what the loan money will be used toward. — Such as real estate or equipment financing. This strategy will allow you to find a lender who may be willing to offer the appropriate loan amount.

What Military Discipline Can Teach You About Money Management

Military duty teaches service members about accountability, duty, and discipline. The same value that help individuals succeed in deployment can inform money management. Here are 6 surprising ways military life can inform personal finance and money management.

Funding for veteran businesses

What Military Discipline Can Teach You About Money Management

1. Maintain integrity with yourself and others

The military promotes a culture of integrity and honesty. Service members must take accountability for their actions and not lie to protect the lives of fellow soldiers and civilians. This is similar to good financial planning.

After service, veterans can carry the same values forward for smart money management. How? by taking an honest assessment of their debts and savings. It means not overspending and curbing bad money habits. It can feel scary to confront a five-figure debt. However, being honest about what you owe is the first step toward overcoming bad financial habits. And getting on stable ground.

2. Take responsibility

Service members must take responsibility for their actions and not shirk consequences, positive or negative. When you’re transitioning from active duty to civilian life, it may take a while to gain an accurate understanding of your expenses, income, and all of your debts.

Some people zone out when trying to get a handle on their personal finance. – You might find it overwhelming if you’re not a numbers person! Anyway, the military value of taking responsibility can help you repay debts on time and in full. Often it is by accepting responsibility for outstanding credit card, mortgage, or personal loan debt.

3. Endure sacrifices

Service members often work in uncomfortable situations for long periods of time, enduring a short-term sacrifice as part of their duty. Regarding money management, military personnel can apply the same principle of sacrificing comfort in the short term for the greater good later on.

Whether it’s making do with an old clunker or passing up pricey meals out and cooking in, sacrificing can boost short-term savings toward a goal such as debt repayment or savings for a home down payment to reduce a mortgage loan.

4. Prioritize tasks

Military leaders analyze, prioritize, and plan. Just like you would to maximize your budget. They know that rushing into a task or trying to multitask backfires by spreading the attention too thin. If you feel overwhelmed about your financial situation or unsure which debt to pay down first, you can fall back on military training and make a plan. Prioritizing tasks keeps you on track, helps you measure progress toward a goal, and helps you regain control of your money.

5. Delegate when necessary

Military men and women work as part of a team, and there’s no reason not to take the teamwork approach with your personal finances. A financial adviser, accountant, investment planner and others can help you make the most of your money so you protect your family and save for your dreams.

6. Stay resolved and don’t quit the course

Just as a soldier must develop grit and persistence to make it through basic training, you need determination and resolve for the long haul to reframe your money management. If you’re trying to change your relationship with your money or get on top of debts, the resolve you honed in the military can help you stay strong even when unanticipated obstacles get in the way.

Loanry helps you every step of the way. Whether you need tips and tricks to better your financial situation, or you need help finding lenders, we’re here.