Getting a small business loan in today's economic environment can prove difficult. Small business lending has been down from its highest levels since 2008 but is steadily improving. Though availability is improving, it nonetheless remains difficult to secure commercial funding, especially for small businesses. The reason for this is largely due to new federal banking and lending restrictions, combine these with lenders that are adverse to risk, and it's little wonder why small business lending remains anemic.
To get a small business loan, applicants must be able to amply demonstrate a track record of turning a profit and be willing to sacrifice much time and attention on the loan process, beginning with the application, through the review period, and on to the eventual decision. This process takes a minimum of two to three months, according to a news article published in the Houston Chronicle. So, applicants must get an early start, strategically planning when they'll need funding.
The Traditional Small Business Loan Experience
To get a small business loan, be it through the Small Business Administration, which is not an actual lender, but an intermediary, through a traditional bank, or credit union, which offer few choices, applicants can expect to find a long and tedious application form. These forms are only the beginning, as often, more documentation is needed to verify the information provided on the initial application.
Applicant business owners will not only have to complete their application to the lender's satisfaction, but also provide a number of documents for lender review. These documents typically include: personal and corporate tax returns for the past three to five years, full personal and business asset and liability disclosures, certified financial statements from a professionally licensed accountant, and profit and loss projections spanning three to five years or more into the future.
In addition to verification and qualification documentation, applicant business owners typically must agree to sign a personal guarantee, as well as pledge substantial collateral, to gain approval. What's more, a credit check will be conducted by the lender on the business and on the owner, in some instances. Businesses with less than stellar credit will likely have to pledge more collateral or will be denied a loan.
How to Get a Small Business Loan Fast
To avoid the hassle of the traditional small business loan process and get commercial funding fast, an alternative is available. Merchant cash advance loans provide an excellent alternative source of commercial funding because these products' approval are not based on tax returns, certified financial statements, collateral, credit checks, and profit and loss projections. Instead, these loans are based on a business' monthly credit card sales and what's more, come with competitive rates.
Fast Business Loans with Competitive Rates and Flexible Terms
A recent best small business loan review found that of all commercial funding products, the quickest small business loan options are made available by alternative lenders. Compared to traditional loans, approvals were typically given in one to two days and funds directly deposited in under a week. The rates are competitive and payments are based on a percentage, not a fixed sum, making these products very affordable.