A small business loan is a type ofcommercial financingqualified businesses can get from traditional banks, online lenders and credit unions. Businesses can use funds to cover the costs that come with operating and growing a business, including everything from working capital and equipment purchases to larger purchases like real estate.
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What is a small business loan and how does it work?
A business loan is any type of financing that鈥檚 used to fund business expenses 鈥?from paying staff wages to purchasing inventory. Available through banks, credit unions and online lenders, your business typically needs to be at least six months old and bring in over $50,000 a year in revenue to qualify.
What are the requirements for a small business loan?
Business loan requirements 1 Credit. When a small-business owner requests funding, lenders almost always check the owner鈥檚 personal credit. … 2 Cash flow and income. Lenders look at the debt-to-income ratio of a business when assessing its risk. … 3 Age of business. … 4 Current amount of debt. … 5 Collateral. … 6 Industry. …
What are the best loans for small businesses?
Here are some of the best loans for small businesses, including bank loans, business lines of credit, term loans, and equipment financing. Business term loans. This is a traditional business loan repaid over a set period. The short-term loans can range between 3 and 18 months, while long-term loans are extended for up to 10 years to repay.
Can I get a small business loan with bad credit?
There are many types of small business loans for business owners with bad credit. Some online lenders offer microloans, crowd-sourced loans, lending marketplaces, and more. These online lenders typically do not require as high of a credit score as a bank. Check out our list of best business loans for bad credit.