Banks, credit unions, and a few other financial institutions loan funds to businesses. While news organizations report credit declines, many smaller institutions, regional banks, and credit unions still have money to lend.
Business Loan Types
Collateral loans require something equal value for the loan. Inc. Magazine published 5 Tips for Using Collateral to Secure a Business Loan. The company forfeits the collateral if the business defaults on the loan. The collateral may be physical assets, cash in hand, property, equipment, and guaranteed contracts. The collateral must equal the value of the loan.
Guaranteed loans do not require collateral. Typically someone else guarantees the loan. In these situations, an organization negotiates for the loan money and guarantees that the loan will be repaid if the business defaults. The Small Business Administration remains the most common guarantor. Most states also provide organizations that guarantee business loans under $10,000 or more than $10,000. The US Treasury Department also offers the Small Business Lending Program and State Small Business Credit Initiative. Agricultural businesses qualify for special loans.
Process for Applying for Business Loans
Competition for the funding remains fierce. Potential borrowers must present impressive reasons to loan them the money. They must also provide financial statements, background, and business plans. The SBA provides a nice checklist you may wish to review. Resource Nation also provides good information about the loan process. You can receive expert counseling, at no charge, from the Service Corps of Retired Executives (SCORE) on applying for loans. Call the chapter nearest you to arrange for coaching from SCORE.
While I recognize the simplicity of my blog. I try to link you to others sources of details that I lack. I hope that you find it helpful. Please let me know.
Join me on Tuesday when we review other sources of financing your business
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