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How to Get Your Working-Capital Business Loans

How to Get Your Working-Capital Business Loans

Working capital is a term that describes the net liquidity of a business. It equals the total liabilities of the business minus its total assets. If you have negative working capital because your business is new or experiencing slow growth, you should consider obtaining a working-capital business loan.

Working-capital business loans are similar to business lines of credit, because they’re meant to help your business sustain its day-to-day operations and expenses. They offer a cash reserve you can use to hire more employees, purchase new equipment, or add more inventory. If you lack cash reserves to pay for needed business expenses, a working-capital business loan can make up for the money you don’t have at the moment. As you start building up your company assets, you can repay the loan and watch your working capital rise.

There’s no clear distinction between working-capital business loans, business lines of credit, and short-term business loans. In many respects, they’re all the same thing, since each increases a business’s working capital. Traditionally, however, working-capital business loans have been short-term loans meant to cover immediate business expenses. They’re meant to help businesses grow, especially when they’re new or going through a period of slow growth.

Here are the main benefits of obtaining a working capital business loan:

Boost Cash Flow – Small businesses depend on steady cash flow to pay for their monthly operating expenses. If you don’t get many customers or cash flow from selling your products or services, a working capital business loan is the only way to keep your business afloat. Just make sure you have a plan to boost your revenue quickly. You don’t want to keep borrowing money forever to pay your operating expenses.

Emergency Fund – Every small business needs to have an emergency fund in case some unexpected expense or problem arises. What if bad weather or an intruder damages your building? What if you suddenly run out of inventory and have nothing left to sell your customers? These are cases where an emergency fund can help tremendously. A working-capital business loan can become your emergency fund.

Expand Your Business – Once your business is generating steady cash flow, you might want to take the next step and expand the business. This might require leasing or purchasing another building, hiring more employees, investing in training, purchasing more equipment, and so on. Even a positive cash flow probably won’t be enough to pay for all the expenses an expansion will generate. That’s why you need a working-capital business loan for this purpose.

Get Your Working Capital Business Loan Today

Ready to apply for a working-capital business loan? If so, Globelend Capital is ready to guide you through the application process. The entire process can be done over the internet in less than 6 minutes. The decision on the loan approval will take up to 24 hours. There are no upfront fees to worry about. Most applicants are approved for these loans unless the owner has a terrible personal credit score.

Working capital business loans can be anywhere from $25,000 to over $1 million. Most small businesses need between $100,000 and $500,000. If you’re unsure how much you need, start out with a relatively modest $25,000 loan. You can always request an increase in your limit if you’ve successfully made payments toward your loan amount.

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Short-term Business Loans

Benefits of Small Business Term Loans

Benefits of Small Business Term Loans

Trucking Company Business Loan

Small-business term loans are like SBA loans. The only difference is that small-business term loans are not guaranteed by the SBA. In other words, the lender will not be reimbursed by a federal agency if you default on your loan. The maximum amount you can borrow depends on your personal credit score and other details related to the business.

Small-business term loans are issued in one lump sum. You’re expected to make fixed payments against the total loan. These could be monthly, weekly, or bi-weekly, until the loan is paid. The name “term loan” means the loan comes with a fixed repayment plan for a specific length of time. It doesn’t matter how much of the loan capital you spend up front, because you still have to repay the total loan amount at a fixed rate.

Benefits of Small-Business Term Loans

There are several benefits to choosing a small-business term loan over a business line of credit. These benefits include:

  • The repayment plan is predictable and easy to follow, because the payments are fixed.
  • You can spend the capital on any business expenses you wish, no matter how small or big.
  • The interest rates tend to be low, because the terms are fixed.
  • There are no prepayment penalties.
  • The fixed-term lengths may range from 6 months to 5 years. It depends on the amount you borrow, which can be between $25,000 and $500,000.
  • The loan application process can be done over the internet. The average user finishes the application in 6 minutes or less. If you submit all the documents required for the loan with your application, you’ll have an answer within 24 hours.
  • You can use a small-business term loan to maintain positive cash flow in your business by hiring more staff, expanding the business, replacing or buying equipment, or renovating the business.

Types of Small-Business Term Loans

There are three main types of small-business term loans: short, intermediate, and long. Each type has a different term length, ranging from less than a year to up to 20 years. The shorter terms typically have higher interest rates, while the longer terms have lower interest rates. Interest rates start at 4.99% yearly, but sometimes reach 30% yearly. Your personal credit score and business financials will influence the fixed terms and interest rates as well.

Short Term – Small-business short-term loans last for no longer than 12 months. They have the highest interest rates, and you have up to 12 months to pay off the loan. Short-term loans are good if you need short-term financing for small purchases or emergency purchases.

Intermediate-Term – Small-business intermediate-term loans can last anywhere from 1 year to 5 years. Their interest rates tend to be average, depending on factors related to the owner and the business. You can use an intermediate-term loan to pay for larger business expenses such as equipment, inventory, or consolidation of business debt.

Long-Term – Small-business long-term loans have terms anywhere from 6 years to 20 years. You may find the fixed interest rates to be lower if the term is long enough. The best use of a long-term loan would be to purchase larger investments for your company, such as heavy equipment and real estate, or to fund construction projects.

Conclusion

Globelend Capital offers deals on short-term and intermediate-term small-business loans through participating banks and lenders. We’ll work with our partners to find you the lowest rates possible for your loan request. Within 24 hours, you could have the full loan amount deposited into your commercial bank account.

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Revenue-based Business Loans

4 Types of SBA Small Business Loans

4 Types of SBA Small Business Loans

Revenue-based Business Loans

The U.S. Small Business Administration (SBA) has made it their mission to help small businesses succeed. They do this by offering loans to existing small businesses that have been in operation for at least two years. A business owner may want an SBA loan to expand their operation, acquire new equipment, hire more employees, or purchase more real estate.

Since the SBA is a federal agency, they provide a guarantee to the banks that issue SBA loans to business owners on their behalf. That means that if the business owner  defaults on the loan, the SBA will reimburse the lender to cover their losses. Because of this, lenders are willing to offer business owners longer repayment plans, lower interest rates, higher loan amounts and lower monthly payment terms on SBA loans.

SBA loans offer much better deals than direct bank loans. However, you have to meet certain SBA requirements to get approved for an SBA loan. These are not requirements set forth by banks, but rather by the SBA itself. Banks are the lenders that issue the SBA-guaranteed loans to business owners. But the owners must meet the SBA requirements before the SBA will guarantee the loans for the banks.

For example, if you wish to borrow between $30,000 and $350,000 in the form of an SBA loan from a bank, here are some of the basic eligibility requirements:

  • The business owner’s personal credit score cannot be lower than 650.
  • No existing tax problems.
  • The business owner must be a United States citizen or legal resident.
  • The business owner must be at least 21 years of age or older.
  • The business needs to be at least 2 years old.
  • No government-based loan was issued to finance the business.

This should give you an idea of what you need to look for. The SBA can guarantee small business loans of up to $5 million. Loans of this size are normally used to purchase commercial real estate. To get approved for that amount, you need an impeccable personal credit score and business income history.

Types of SBA Business Loans

There are four different types of SBA business loans. Let’s review them now.

7(a) Loan Program – This is the SBA loan program discussed above. It’s the program that guarantees small business loan for banks so that business owners can receive a good deal on the terms of their loan. If the owner defaults on the loan, the SBA reimburses the bank for the loss. The loan program offers a guarantee to lenders of no more than $5 million. The loan is meant to pay for equipment, business expansions, inventory, or to serve as working capital for everyday business expenses. The loans can be processed by credit unions, banks, or specialized lenders. 

504 Loan Program – The SBA offers this special loan program for business owners that need capital to make big purchases such as machinery and real estate. Nonprofit organizations or private-sector lenders process the loans on behalf of the SBA. The loan program offers lenders a guarantee of no more than $5 million.

Microloans – The SBA offers microloans of no more than $50,000 to startups and new businesses that need money for working capital, equipment, and inventory. Community banks and nonprofit organizations generally process these loans. Business owners incur far less risk with microloans, and they have a better chance of getting approved for them.

SBA Disaster Loans – If a natural disaster (e.g., hurricane, tornado) or some other unexpected emergency affects the operation of a small business, the business owner can apply for an SBA disaster loan. The SBA processes these loans directly through their own organization.

Conclusion

Small business owners like you should consider taking advantage of an SBA loan opportunity. You can get started through Globelend Capital. We offer services to connect business owners with all banks that offer SBA-guaranteed small business loans. The SBA loans of the 7(a)-loan program are the most recommended, because they give small business owners the best terms and rates.

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Restaurant Business Loans

How to Get Approved for a Business Line of Credit

How to Get Approved for a Business Life of Credit

Restaurant Business Loans

Every company needs a business line of credit. It allows business owners to borrow up to a certain amount of cash for any expenses related to their business operations. 

For example, let’s say you have an emergency where you run out of inventory and have to purchase more items from your supplier very quickly. You could use your business line of credit to purchase the inventory, instead of waiting until you have the right amount of revenue to do it. You simply pay back the borrowed money as you start selling off the new inventory and watch the return on your investment come in.

Don’t confuse a business line of credit with a business loan. They are two different things. With a business loan, you receive the full loan amount in one lump sum. Because you receive all the money at once, you’re required to pay monthly premiums plus interest to service the loan.

On the other hand, a business line of credit is a cash reserve that’s available to you on demand. You only have to pay monthly premiums (plus interest) on the money you’ve drawn from the line of credit, not on the entire line of credit. The total line of credit you can be approved for depends on the size, age, and monthly revenue of your business. You may be approved for between $25,000 and $50,000, $50,000 and $100,000, $100,000 and $500,000, or $1 million and over.

New businesses won’t need a huge line of credit. In fact, business loans are more appropriate for new businesses with a lot of startup expenses. Business lines of credit are meant for existing businesses. They’re not meant to fund startup costs.

A lot of business owners prefer to have a business line of credit, because they only have to pay off what they spend and nothing more. This keeps their monthly premiums low and their total debt much more manageable. There are no monthly maintenance fees, new account fees, prepayment fees, closure fees, or any other fees. The only extra expense is interest, whose rates start at 4.8%.

How to Get Approved

Globelend Capital offers a fast and dependable revolving line of credit to business owners. Since it is revolving, the money you borrow will be reimbursed back to your credit line as you make payments.

For example, if you have a business line of credit of $25,000 and you borrow $5,000 from it, you’ll have $20,000 of credit left. But you only have to pay back $5,000. If you were to pay back $1,000 of that $5,000, your total available credit would be $21,000. Every dollar you pay back is a dollar added back to the credit line.

There are several requirements that you must satisfy before you can qualify for a business line of credit. They are as follows:

  • You must provide general information about the nature of your business.
  • Your business must earn at least $10,000 in revenue each month.
  • Your business must be at least 6 months old.
  • You need a FICO score of at least 600.
  • You must provide bank statements for the previous 3 months.

Based on this information, we’ll crunch the numbers and see how much credit you qualify for. If it’s in the ballpark of the credit amount you have requested, your application will be approved. If you’re asking for more credit than what you qualify for, your request will be denied. One of our credit agents will call you to see if something else can be worked out.

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