Small businesses often have to look for alternate means of finance. Many small brands and growing startups may not qualify for traditional financing, and in many circumstances, it is actually impossible to wait for cash flow. Financial services like Accord Financial offer small business loans, which can be used for diverse needs. From expanding the business, to repairing existing equipment and buying new inventory, small business loans are handy and have flexible terms & conditions. In this post, we are reviewing more about these loans.
How do small business loans work?
Unlike asset-based finance or other forms of financing, small business loans are approved in a short period, often within the same business day. Once the lender has made a decision, you can expect the money in your business account in just one to two days. Repayments are typically weekly or monthly, depending on the arrangement with the lender. The term for such loans is less than 18 months, so these are short-term loans.
What are the basic requirements?
Each financial service has its own list of requirements for small business loans. Businesses in the US and Canada can apply for these loans, as long as they have annual sales of $100,000 or less, are stable, and have been in business for a minimum period, usually two years or more. The credit history of a business is a matter of interest for lenders, considering that small business loans are unsecured, but if your company has better or satisfactory credit history, getting an advance shouldn’t be hard.
Important aspects that matter
Applying or getting approved for small business loans is easy, but what needs attention is repayment. Your company should be in a position to make the installment payments on time. It is possible to repay such loans in advance, but there is typically a charge for that. In some cases, considering an asset-based loan might be a better idea, especially if your company needs more money, or when a small business loan may not suffice. Work with a good financial service, and they can guide you on the best options. In case your company extends credit to a lot of customers, you can even consider something like accounts receivable financing, which may help with working capital needs.
Review all the terms & conditions and ensure that your have a plan to repay the small business loan in consideration. The right lender or financial service can make a big difference.