How to Get a Business Loan in 2022?
A business owner looking for extra funding to start or expand your enterprise? Find out which 2022 business loans are the top options for you today!
In this review, Nick Wilson, founder and CEO of AdvanceSOS shares his expertise on how to get top-tier business loans in 2022. In addition, he shares the hacks of approaching lenders and showcasing your creditworthiness as a business owner. As an experienced loan officer, Nick also shares how you can ace your application from a lender’s perspective. By having a large legit direct lenders database in California, Ohio, Florida, Advance SOS can quickly help you get payday loans, installment loans.
What Is a Business Loan and How Does One Work?
Business loans are loans you can borrow for a specific purpose only: to finance your business. Business loans vary in which area of your business you use them for. There are loans for startups, funding essential equipment, and expansion (franchise loans). Whichever kind it may be, lenders restrict the use of the loan for business only.
How Much Funding Can You Get Through Business Loans?
As business loan purposes vary, their amounts differ as well. For microloans, you can borrow between $5,000 up to $50,000. But for larger installment loans, you can get up to five million dollars.
How much you can get from the loan will depend on what you need it for. If you only need a loan to cover the minor costs of paying your employees, you may not get much. But if you’re planning to franchise your business, you may be able to borrow more from a lender.
What Are the Typical Business Loan Interest Rates?
Typical business loan interest rates range from 4.99% to 99.00%, depending on the specific type and lender. Loans without collateral, a cosigner, or hard credit checks have higher interest rates. Having strong credit history and credit score can help you get lower interest rates. But there are still loans you can get with bad credit.
Interest rates also depend on how fast you can get a business loan or payday loan, or other types of loan. Interest rates can soar up, so you can withdraw your loan funds more quickly. The higher rate pays for how convenient you get the money you need.
How to Apply for a Business Loan?
#1 Get to Know the Type of Loan You Need
Ask yourself, “What do I need this loan for?” Target which area of your business you need cash for and find the loan type that fits your need. Here are some business loan types,
- Term loan – a flexible small business loan perfect for funding everyday expenses.
- Small Business Administration (SBA) loan – as a low-cost loan backed by the government.
- Business line of credit – a flexible small-dollar unsecured loan with a maximum credit limit.
- Equipment loan – a large-dollar secured loan for buying essential vehicles, machines, and tools.
- Invoice factoring and financing loan – a loan for one-time upfront payments to suppliers and the like.
- Franchise loan – a loan for startups planning to open a franchise branch.
#2 Find for the Best Lender to Approach
Not all lenders have the best financial products for every category. Your task now is to find the top loan provider of what you are looking for based on your needs. Rank the following criteria before looking for a lender, so you know what to put first. Can your lender,
- Lend the entire loan amount
- Give the lowest interest rate
- Be flexible with the due date and late fees
- Approve and release money fast
- Lend with few requirements
- Lend any time, any day
#3 Prepare the Requirements to Submit
Prepare the following requirements to increase your chance of bagging a loan approval,
- Basic personal information (name, address, email, and contact number)
- Tax identification number (as an employer (EIN) and social security number (SSN))
- Basic business information (name, address, email, contact number, industry category, company structure, years of operation, number of employees, annual revenue, estimated monthly expenditure)
- Recent business plans, bank statements, financial statements, and tax returns
Can I Use a Business Loan for Personal Purposes?
No, you cannot use a business loan for your and anyone else’s personal use. You cannot even redirect a specific loan to other expenses within your business. An equipment loan is only, for instance, buying or renting a vehicle, machine, or tool. You cannot use it to pay your employees or fund a franchise.
If your lender finds out you used your loan elsewhere, they can seize your things or charge a penalty.