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    You’ve probably heard that small business loans are a great way to get the financial help your company needs to grow. But before you start applying for loans, it’s essential to find what type of loan is best for your business. Here are some questions you need to ask when you need a small business loan.

    What do I need to know before getting a business loan?

    There are many things to consider before getting a business loan. The first is determining how much funding you require and when your business will need the money. You should also see if you have enough time to prepare the necessary documents before applying. You should also think about whether or not having this type of financing would affect you paying any other bills. Also, don’t forget to check your credit and make sure any adverse items are cleared up before applying. 

    What are three types of financing in a small business?

    There’s debt financing, which comes from banks or other business lenders with an obligation to repay over time with interest. Equity is another option for growing your company if there is enough upfront money in exchange for shares (like stocks). The third option is a combination of the two.

    What does a small business need to get a loan?

    It depends on what type of financing you’re applying for. For example, applying for a merchant cash advance is more straightforward than applying for an SBA loan. In general, you’ll need: A completed application, ID/driver’s license, established credit, business license (if applicable), and three months’ most recent business bank statements to get started.

    What do banks look at for business loans?

    Business lenders will consider the following, including but not limited to your household income, business revenue, cash flow, credit, collateral, and outstanding debt. The amount of money you have invested in the company also comes into play in their decision-making process.

    What are the five steps to getting a small business loan?

    The five steps to getting a small business loan are: 1) Determine why you need financing. 2) Gather all necessary business documents required by the lender for conditional approval. 3) Fill out the loan application. 4) Speak to an executive about your options and submit your loan package to the lender. 5) If approved, you’ll follow instructions from the lender to get the funds to your bank account; if denied, you can begin fixing the issues that resulted in the denial and apply again at a future date.

    Is it hard to get approved for a small business loan?

    If you have trouble getting approved by traditional financial institutions, you might want to consider applying for your small business loan with an alternative lender. Alternative lenders focus more on performance than credit, so they may be able to provide financing even when other banks reject applicants because their scores aren’t high enough or any other reasons for the denial. 

    Do small businesses have to pay back loans?

    If your company fails to honor its responsibilities under any agreement with lenders or creditors, they may take legal action to reclaim their capital. This lengthy and costly process can be devastating to your finances, and your business may need bankruptcy protection due to the financial burden from unpaid debts and legal fees.

    What happens if a business loan is not paid?

    If a company fails to honor its responsibilities under any agreement with lenders or creditors, it may take legal action to reclaim its capital. This lengthy and costly process can be financially devastating, and a business may need bankruptcy protection due to the financial burden from unpaid debts and legal fees.

    Do you have to pay back a business loan right away?

    For any loan agreement, the repayment terms should be laid out clearly. The borrower is obligated to make all payments according to the terms laid out in the loan agreement. Unless they have a particular repayment plan created after the loan agreement, all loan payments must happen according to the agreement. 

    What is the average time to pay back a business loan?

    The average time to pay back a business loan depends on the type of business financing product you take. A business can complete a merchant cash advance in a few months as opposed to an SBA loan that could go up to 25 years + in some cases. 

    What can small business loans be used for?

    There are many reasons you might need to get money for your business. The most obvious is that your business needs some more capital for its day-to-day operations or expansion. It can also be used as collateral on another type of transaction, such as improving terms with creditors or even buying equipment outright. Although it’s not advised, some businesses take out loans to stay afloat during lean periods.

    Can you use a business loan for anything?

    Unless otherwise specified, you can use your business loan for any business purpose. 

    Can you use a small business loan for personal use?

    It’s essential always to keep your business and personal life separate. We do not recommend paying yourself with a business loan at all. It makes no sense to put your business in financial jeopardy to cover personal responsibilities temporarily. Some lenders may call their loans and pursue legal action if they become aware that this is the case. 

    How much loan can a business get?

    The amount of money you can get for your business is primarily determined by its creditworthiness, existing debt, and annual/monthly gross sales. Most lenders won’t lend more than 10% to 30% of a company’s revenue in any given year mainly because they want assurance on its ability to repay their investment if problems arise. You’ll also need proof of solid cash flow, as this is crucial in determining how much room you have for debt service.

    Can you get a business loan with no deposit?

    Some people think you need to put down money for a deposit when getting a business loan, but this isn’t always necessary. Unsecured loans do not have this requirement.

    Is it OK to take out a loan for business?

    If you are looking for a way to get your business off the ground or expand, small business loans might be the thing for you. If you know you can invest that money correctly and make a profit, then it’s OK to use a little leverage to grow your business quicker. 

    Is getting a business loan a good idea?

    A business loan is a good idea for those businesses that could use some capital to increase the size and scale of the company. If you’re using the loan without a plan in place to use the funding effectively, you could end up in a worse financial position, causing a downward spiral. 

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    Written by

    United Capital Source

    United Capital Source has been helping small business owners find the working capital they need to grow their businesses since 2011. Your business is our only business!

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