Our Loan Review Process
A small business lender is the entity that will fund your loan. If you’re taking out a private small business loan, the lender may be one of dozens of private lenders. If you take out an SBA loan, the lender will be a bank or non-profit that will be backed by the Small Business Administration. Of course, you may be lucky enough to get a small business loan from your bank, but most financial institutions prefer not to grant small business loans, which is why private small business loans have become so popular. It’s worth noting that if for any reason you are unable to secure a loan from more traditional lenders you can look into peer-to-peer lending opportunities.
To help you make the right decision, we’ve reviewed dozens of small business lenders, and weighed factors that will be most important during the decision-making process. We started by listing the requirements that each lender demands in order to approve your application. This will give you a bird’s-eye view of whether a specific lender is a good fit for your business. Then we researched the types of loans offered, loan rates and fees, maximum loan available, and rates and fees for each lender. We’ve also evaluated the ease of the application process, the time it takes to process the application, and the customer service offered by each small business lender. Finally, we’ve read hundreds (if not thousands!) of reviews left by real users to see what others are saying about each lender. Sure, our professional opinions are important – but why trust us alone, when you can get a cross-section of user reviews without having to spend the time reading them all? We’ve done the work for you so that you can spend more time focusing on your business and less time focusing on your business loan.
Do Your Homework
Before a lender turns over its cash to you, it will do thorough research about you, your company, and your goals. Shouldn’t you do the same research about your potential lender? You may feel pressured for money, but don’t let financial stresses rush you into making a decision without first doing your homework. Remind yourself that there are dozens of small business lenders to choose from and you shouldn’t feel pressured to borrow money from any lender that doesn’t make you feel 100% comfortable.
We’ve answered most of the most pressing questions in our thorough small business loan reviews. However, if there are questions that you’re still not sure about, the time to ask is before you commit to a small business loan, not after. Ask potential lenders the following questions:
- How long is the application/approval process?
- What documents are required for the application process?
- Has the lender lent money to businesses in your industry before?
- What are standard repayment terms?
- Are interest rates fixed or variable?
- Is there an early payment penalty?
We also recommend that you consult with a financial advisor or small business mentor who can help you determine which type of loan and which terms will be best for a company with your specific criteria and needs.
How to Identify the Right Lender for Your Business
No matter what your needs are, we want to help you find the right lender for your small business loan. That’s why we’ve taken all of these criteria into account and have compiled a list of the best small business loans on the market. Keep in mind that just as there isn’t one business model that works well for every business, there isn’t one small business lender that is ideal for every single small business.
Requirements to Secure a Small Business Loan
Congratulations, you’ve decided to take out a small business loan! Now what? The good news is that applying for a small business loan has never been easier. The abundance of online opportunities means that you can shop around for loans and then apply for them from the comfort of your home or office. You can also take time to get your documentation in order so that the application process should be relatively painless.
Lenders usually prefer to lend money to companies that meet the following requirements:
- Good to excellent credit scores (don’t despair if you don’t have good credit – there are some small business loans that are specifically geared towards companies with bad credit)
- Lenders will likely check the business owner’s personal credit history as well as the company’s credit score, so both should ideally be in good standing
- Proven cash or income flow that can be used to repay the loan
- A minimum time in operation (many lenders require a minimum one year of operation, but there are some lenders that will extend loans to younger businesses)
- A valid reason for the loan
Some lenders may also require collateral to secure the loan. We recommend carefully researching all required loan criteria for any of your ideal lenders before applying so that you’ll have the best chances for getting your request approved. You should also be aware that while applying for a small business loan should not directly impact your credit score, there are some cases in which your score may be affected, so you should check this carefully before applying for any loan.
How Long Does it Take to Get A Small Business Loan
As in many things in life, once you decide to move forward, you probably wish you had started yesterday. Or you would like the loan to come through by tomorrow. Unfortunately, as you’ve probably discovered by now, that’s not exactly how things work in the business world. A small business loan, like any other type of loan, can take some time to get sorted and processed. If you’re applying for an SBA loan, expect the process to take up to 90 days. If you’re applying for a bank loan, the process may be even longer. Fortunately, there are many private small business lenders that are designed to help you get funded faster. The terms may not be as good as an SBA loan, for example, but if you’ve got a need for speed, a private lender may be the best option for your company.
Services like Lendio and Bluevine boast fast funding directly on their websites, a note that should make you feel comfortable if you have looming financial deadlines. In fact, many private lenders claim to provide small business loan approvals within a day! Still, it’s important to remember that it’s better to do things right than to do them rushed – make sure you’ve found the small business loan with the best terms for your business before confirming your loan.
It’s Time to Get Started
There are many, many worthwhile and valid reasons to take out a small business loan. Taking out a loan doesn’t mean that your business is failing or that you haven’t succeeded enough to make it without assistance. A small business loan may be just the step you need to take your small business to the next level. Perhaps the loan will enable you to create more of your product in a shorter amount of time. Perhaps it’ll allow you to hire more people who can achieve more of your professional goals. A small business loan may be what you need to purchase or rent a larger work space or warehouse. If your company is struggling with cash flow problems, a small business loan can provide the cushion that you need to move forward without feeling the strain every time you pay a vendor. Don’t let the application process get you down – think of it as an opportunity that will be the first step towards greater success. Once you’re in the right frame of mind you’ll be able to research your small business loan options with optimism rather than anxiety.
Remind yourself that many of today’s biggest, most successful companies started off with a small business loan. But don’t take our word for it – check the startup stories of Nike and Chipotle and you’ll see that these business icons once took out SBA loans to fund their growth. So did Under Armour and Chobani yogurt! Apple’s famous founders Steve Jobs and Steve Wozniak needed to borrow $250,000 from banks to get their now-behemoth company off the ground. Amazon founder Jeff Bezos started his success story by borrowing $100,000 from his parents. American Apparel founder Dov Charney borrowed $10,000 from his father to start his clothing empire. GoPro was founded with a $235,000 loan from founder Nick Woodman’s father. An there are dozens (if not hundreds) more successful businesses whose founders knew that they needed some help to get to the next level. If these savvy entrepreneurs saw the benefits of these loans, surely a small business loan can’t be all bad, right Mark Cuban?
Consider the benefit that taking out a loan and making the payments on time will build up your business’s credit score and help you create a stronger springboard for future loans and financing opportunities in the future. Remind yourself that taking out a small business loan will not be a great solution for getting out debt unless you have other plans for making your company more financially stable in the future. You may need to reconsider your business plan or make some hard changes or cuts before a loan will really help you get your company back on its feet.
Once you’re confident that taking out a small business loan is right for you, do your research, gather your paperwork and roll up your sleeves. There’s no harm in applying for multiple small business loans and to comparing which one can offer the best terms for your business. Don’t feel pressured or rushed into choosing the first available opportunity. As the old proverb says, “good things come to those who wait.”[/vc_column_text][/vc_column][/vc_row]