Nearly two-thirds of all jobs are created by small businesses according to the Small Business Administration (SBA). Yet, most small businesses have serious problems raising capital. Most banks prefer large multinational corporations with a large asset base, cash flow and history. And with the credit crunch of 2008, some financial institutions are even more apprehensive about lending to “more risky” small businesses.
What is the Best Place to Get a Small Business Loan?
The truth is that the best place for a small business loan might be alternative lending institutions. These groups are more independent with flexible rules, a wider variety of financial packages and higher risk tolerances. Many of these alternative groups are run by entrepreneurs who understand the challenges of creating new products and services. Even Time had to admit in the aforementioned Biz2Credit report that “institutional lenders approved 61.4% of small-business loan applications, which is slightly higher than the rate at alternative lenders.” Thus, alternative financing companies were near the top when it came to approval rates for small businesses. The best lenders are ones that offer different financial packages for both short- and long-term goals. Most commercial loans are from five to seven years, which can be somewhat limiting. The Halo Capital Group can help you find loans that would would prevent your company from experiencing a funding gap in your future.
What Would the Best Business Loan Look Like?
Each entrepreneur has his own specialized field of knowledge that can be turned into a profitable venture. The best small business loan will combine the firm’s needs with the ideal financial package in terms of amount required, competitive interest rate and reasonable period of time to repay the loan. For one firm, the best business loans might be used for short-term funding of a new location or brand marketing campaign. For another firm, the best business loan will create a reliable long-term line of credit for business expansion. Companies with great cash flow might be able to look for financial institutions with higher profitability, capital strength and high quality assets.
How to Get the Best Small Business Loan Rates
You can receive the best small business loan rates when you have a high business credit score, good collateral and strong positive cash flow. You should probably check your business credit score before applying. There are also services that can help you with negative online rumors spread about your firm, which can tarnish your business’ profile and hurt creditworthiness. In addition, you should clear any liens and resolve any disputes with customers before you apply for your business loan. Your rates will reflect your creditworthiness in the eyes of your lender.
How to Identify the Best Banks for Small Business Loans
Not all banks are created equal. In fact, some banks are quite specialized. One of the best resources for loans is the Small Business Administration. The SBA does not have its own capital, it is actually more like a document processing service that will connect you with the financial lending groups.
The SBA microloan program offers some of the best small business loans for very limited operations. This loan provides the necessary capital to accomplish all of your goals. The best banks for small business loans will go out of their way to fund more small firms. While most banks prefer at least two years of operations, the best lenders understand that start-ups need funding too. On July 17, 2015, Benjamin Pimentel wrote an article for Time reporting the results of a report noting that “big banks approved 22.1% of small-business loan requests in June 2015,….” Basically, about 1 out of 5 small businesses will qualify for big bank funding.
Business finance can be a challenge for small start-up firms or mom-and-pop shops that need capital. Small companies need to find a financial institution offering capital to fulfill any number of needs: short-term brand promotion, branch expansion or growth to capture market share. Once you find the best place to get a small business loan, you can partner together to achieve great things. Modern business finance also includes credit unions and alternative lending groups who offer a variety of financial services.
The best way to find small business capital is to ask alternative financing firms what packages they have to offer. Enter your contact information into the form to get in touch with a Halo Capital Group representative. If you are a corporation looking for a loan, please see this page.