All About Getting a First Time Business Loan
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How Do You Apply for a First-Time Business Loan?
Checking Your Credit Score
Figuring Out How Much Money to Apply For
Debt-Service Coverage Ratio (DSCR) and How to Calculate It
Types of First Time Business Loans
7(a) loans. The most common SBA loan, this funding can be taken out for long-term or short-term working capital, to refinance existing business debt, or to buy equipment, among other purposes. The maximum loan is $5 million. 504 loans. These long-term fixed-rate loans are meant to provide financing (up to $5 million) for fixed assets to promote business growth and/or job creation. Microloans. These small loans (up to $50,000) are made to small businesses and some nonprofits to help them start up and/or expand. Disaster loans. Business owners may opt to take out Business Physical Disaster Loans or Economic Injury Disaster Loans when their businesses have been damaged by a variety of disasters.
Business Acquisition Loans
Alternatives to First-Time Small Business Loans
Personal loans for business. These are traditional loans that you may be able to get as an individual. Not all lenders will want to issue these for business use, so it’s important to check when you’re considering applying. And note that while paying your installments promptly for a personal loan may help your personal credit, it won’t help your business establish an independent credit history. Crowdfunding. For this funding option, you set a monetary goal and create a marketing campaign to solicit funds online through a crowdfunding site. The idea is that people will give you money, either as a donation or as a loan, depending on how you structure your campaign and what site you use. Crowdfunding can help you raise excitement about your business and test the waters to see how interested people are in it, but be aware that different crowdfunding sites have different rules about making returns to your benefactors. Loans from family and friends. Supportive members of your family or friends may be willing to loan you small amounts. If loans like this can meet your needs, they could be a possibility. It’s important to make sure that the terms of loans like these are clear and both parties feel they’re fair so that the relationship isn’t jeopardized.
Comparing Loan Options
Frequently Asked Questions
About the Author
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