The Small Business Administration estimates that more than 67% of small businesses fail within the first 10 years. And the lack of funding is the biggest reason behind it!
So where do they always go wrong? Why do small businesses keep failing in finding the right funding? The simple answer is - AWARENESS!
Small businesses do not know about different types of business loans and hence end up applying only to the popular ones; even though they might not be the right choice.
Business loan type should be decided upon careful consideration of ‘needs’, ‘availability’ & ‘requirements’ of a new business.
For instance, getting a business loan for a running/older business is comparatively easier. It has regular cash flow and receipts that can help with the process.
Even a business with a bad credit score can apply for loans via business line of credit or merchant cash advance, as credit score is not a deciding factor in such loans.
But a new business has limited resources and credentials. And hence, there is a higher probability of getting over-leveraged by banks!
So instead of asking how to get a business loan, ask how to get the right business loan! When you have the right business loan, you won’t be burdened with the repayment amount. You’ll have ample cash flow to manage everything!
Here’s what you need to do:
1. Find A Full-Service Financing Firm
A full-service financing firm like Greenpoint Capital can be the difference between getting any business loan and the right business loan!
You must be thinking, “Why do I need a financing firm?”
Well, seven out of 10 business loan applications get rejected by the banks. And in desperation, new and small businesses opt for any kind of loan that they can get their hands-on!
But the problem begins once the tenure starts. They are unable to keep up with the increasing repayments rate and hence end up paying multiple times more than what they should’ve.
And this is where a financing firm can help you. They fill this gap between any loan and the right loan!
Here’s how you can apply for a business loan with Greenpoint Capital in 3 minutes:
2. Decide Your Requirements
To answer this question, ask yourself:
- What is the ultimate goal of your business?
- What resources do you need to achieve that goal?
- How far are you from that goal right now?
When you ask these three questions, you’ll have a clear roadmap of the loan amount that you may need.
If you’re still in the initial stages and need to lay down the foundation of your business, you may need a new workplace, computers, tablets, productivity software & tools, office supplies, business furniture, and several miscellaneous yet important things.
You’ll have to pay for permits and licenses depending on the city you live in. And all of these need a consistent cash injection to get done on time.
Hence your next step should be deciding the type of loan you’ll need! A loan that will give you the flexibility of balanced repayment tenure with the right interest rate.
3. Choose The Right Business Loan
This is where the job of a financial firm becomes crucial. A firm that has years of experience can decide the right loan type is just a matter of a few discussions and you’ll be ready to proceed.
To give a gist, here are four important business loans that can be right for your new business:
a. Equipment Financing
Businesses can make use of equipment financing to fund 100% of the amount that they need to buy new equipment. This can be either a machine, vehicle, or any kind of computer.
As long as the periodic repayment is managed, the business will continue to have access to the equipment. Upon failure of multiple repayments, the funding institution can seize the equipment. The application process is fairly simple as compared to other loans.
b. Business Line Of Credit
Business lines of credit is a system where businesses can access a limited amount of funds to handle their daily expenses, cash flow gaps, address an emergency, or take advantage of an opportunity.
The unique thing about this credit system is that upon repayment, the balance sheet is turned back to ‘0’ and businesses can again apply for the credit if the funds are needed.
c. SBA Loan
An SBA loan is a federal agency backed (partially) loan that is issued by banks or other financial institutions. Small Business Administration(SBA) guarantees the loan, hence the interest rate is lower as compared to traditional loans.
Several funding programs use federal money to guarantee up to 85% of the loan amount.
d. Short Term Business Loan
As the name indicates, short-term business loans are specifically designed for shorter repayment periods. A business can have access to a lump sum of money that they need to pay off in less than 18 months.
This business loan is preferred by businesses due to its unique feature of set structure for regular payments.
4. Get Funded
Upon discussion with the financial firm, analyze your findings. Categorize them on the basis of pros & cons. Then align the firm’s suggestion with what’s best for your business and if everything seems right, proceed with the business loan.
Getting a business loan is a complicated process. And we, at Greenpoint Capital, realize that every business has unique needs at any point in time. And hence, we specialize in listening to those needs and pride ourselves in being fully transparent when we are providing advice to business owners and which programs they qualify for.
And depending on what your business qualifies for, we can help secure as low as $5,000 to as high as $10,000,000 worth of the business loan. We also make sure that your business can afford the payments and doesn't get over-leveraged.