Small business owners always have multiple growth opportunities that require working capital. This guide will show you how to secure a quick business loan and get approved with little to no collateral needed.
We spoke with Nishank Khanna, CMO at Clarify Capital, on what are the top funding options for small business founders. Having helped companies get financed online for years, Khanna broke down the four most popular options:
1. Term Loans
Short term loans are a traditional lending option most people are familiar with. The structure of the funding is like a home loan: you get a fixed amount of money for a fixed interest rate from a lender or banking institution. APR for term loans start at 5.5% depending on how good or bad your credit rating is.
2. Business Line of Credit
An alternative to business credit cards, a line of credit provides the same model of financing as a credit card — but at a much lower interest rate. APR for line of credit starts at 4.8% and you get the advantage of only paying interest on withdraws you make from the approved total amount. It’s essentially like a credit card with low costs.
3. Equipment Loans
Buying and repairing equipment is a constant expense for small businesses. Just like buying a vehicle, equipment financing from lenders like Clarify allow you to fund 100% of the purchase. You don’t need to provide any collateral for an equipment loan since whatever you buy is the collateral itself. That makes it very easy to get approved for this type of loan.
4. SBA Loans
Loans from the Small Business Administration are usually the most coveted type of funding. The downside is that only companies like excellent credit scores and financial records can get approved. Even then, the process is very long and there are strict paperwork requirements. The good news is that the SBA will back 80% of the financing through their approved lenders and banks.
How to get approved for an easy business loan?
In order to speed up the funding process, Khanna recommends you have the following things prepared prior to applying for an easy business loan:
- Know your credit score. You can find out your credit rating with free services like CreditKarma. To get approved you should have a rating of at least 550.
- Have last three months of bank statements handy. Almost all lenders will ask to see your last few bank statements for verification.
- Know when you started your company. Lenders like to approve companies that have been in business for at least 6 months (preferably a year or more).