Small businesses often are in need of funding to really get off the ground and start running at full capacity. However, where can you get that money from if you haven’t just won the lottery? There are many options available for small businesses who are looking for funding in the form of loans, including traditional banks, local credit unions, the government and online brokers.


Am I eligible?

Once you’ve identified the route you’d like to take when pursuing your loan, you need to make sure that you are eligible for that kind of loan. As part of the loan application and decision-making process, the financier of your loan needs to agree that you are a good risk for their money, meaning you are likely have the ability to pay the loan back on time through regular payments. Much of this information will be gathered from your business plan, where they will analyze your cash flow projections, but some of it will come from your own personal history. The personal history states that you have paid your previous debts and that you are a law-abiding citizen. You can even have a bankruptcy in your past without it automatically ruling you ineligible for a loan , however you just need to have a record of good credit in the years since the bankruptcy.


How much can I borrow?

The amount that you can borrow will be dependent on where you try to borrow your funding from and the size and content of your business. The average small business loan through the government is approximately $370,000, whereas many loans from banks are usually around $130,000. Regulations for lending also comes into play here, which means that you can’t borrow more than a certain percentage of your business’s total assets. For credit unions, this means that they cannot lend you more than 12.25 percent of your total assets, which could be limiting if you choose to go with a credit union loan.


What paperwork do I need?

Once you’ve made the decision on how much you need and where you’d like to get it from, make sure you have all of your financial records and business plans ready. The lender’s representative will be able to help finalize the process with you to make sure you get the best loan possible for your situation.




This article was written by Gillian Kruse for Small Business Pulse


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