There are multiple lender programs based on business needs all over the USA. ALL Lenders are different and have different lending policies. The reason a business is declined for credit may not be the fault of the business, it could be the lenders policies or availability to lend to that industry code. Therefore, it is a good idea to access multiple lenders at once to see what is available to your business.
Traditional Term Loans:
Traditional loans can be used for purchasing equipment, inventory or refinancing of debt. Often this program requires you to have more collateral than the loan amount. If it’s a purchase of equipment, you may have to put 25% to 30% down unless you have other collateral available. This may not be practical for all businesses.
SBA 7A Lending:
The Small Business Administration (SBA)7A program can helps businesses access loans that are hard to place elsewhere.
The SBA lenders loan is typically guaranteed up to 75% by the U.S. Government’s, which allows SBA lenders to take more risk. This option is great for businesses that would like to expand or buy a business; people looking to start a business or buy an existing business that will be directly managing the business. The business or person may not have enough cash for a traditional down payment of 25% down or more or enough collateral for a traditional loan. The SBA 7A program can helps businesses access business loans that are hard to place, or who only have 10% down in cash or not enough collateral.
Commercial Owner-Occupied Building Loans: OOCRE
There are several different types of building loan programs based on your business needs. If your business will be occupying 51% or more of the space, you may qualify for an SBA 7A program or an SBA 504 program. The down payment required can be from 10% to 25% of the total project costs with the loan terms being up to 25 years. If you or your business has 25% or more for the down payment and the closing costs, there are hundreds of national lenders that would like to bid on your request. You just need to know how to access them. This is where a loan broker can help you get the best terms possible.
Commercial Investment Property:
Commercial Investment Property is where you or your investment company want to purchase real estate and not occupy the building. This type of request usually requires 20% to 25% down and will allow up to 30-year terms. This is for apartment buildings that are 5 units or more, warehouses, office buildings, retail strip mall configurations or other similar properties.
Available for both short- and long-term needs. A business loan can provide you with an agreed upon sum of money that you will pay back over a specified period of time, with interest. The amount of interest paid and the total overall cost will depend on whether you opt for a short-term loan, which typically has a higher interest rate but a lower overall cost or a long-term loan, which tends to have a lower interest rate but a higher overall cost. This can take the form of several different repayment sources. Most of the time you will use credit card receipts for repayment.
Financing product exclusively for healthcare industry. The economics of running an independent practice have changed
extensively over the past couple of years, making it difficult to manage cash flow. The underwriting process, financing length and repayment terms all take into account the new reality of lower insurance premiums and longer wait times for insurance payouts being faced by independent healthcare practices.
If your business needs new equipment, but you don’t have enough available cash to make the purchase then this is a great option for you. The equipment financing product allows you to choose between purchasing your new equipment or leasing it with rights to renew. Equipment loans involve regular payments that include both the principal and interest. Equipment leasing is similar to leasing a car where you pay “rent” for use of the equipment over a specified amount of time.
If you have a fully executed contract to do work for another business or for the State of Alaska and or for the federal government and you do not have the needed cash on hand to get the job spun up and mobilize, this type of loan can help.
The business and the owners will be required to provide a full credit package along with a copy of the fully executed contract for review by the lenders. This is typically a short-term loan and will require payment within 12 months.
Asset-based lending is the business of loaning money in an agreement that is secured by collateral. An asset-based loan or line of credit may be secured by inventory, accounts receivable, equipment, or other property owned by the borrower. If the company seeking the loan cannot show enough cash flow or cash assets to cover a loan, the lender may offer to approve the loan with its physical assets as collateral. For example, a new restaurant might be able to obtain a loan only by using its equipment as collateral.
The terms and conditions of an asset-based loan depend on the type and value of the assets offered as security. Lenders prefer highly liquid collateral such as securities that can readily be converted to cash if the borrower defaults on the payments. Loans using physical assets are considered riskier, so the maximum loan will be considerably less than the book value of the assets.
For example, say a company seeks a $200,000 loan to expand its operations. If the company pledges the highly liquid marketable securities on its balance sheet as collateral, the lender may grant a loan equaling 85% of the face value of the securities. If the firm’s securities are valued at $200,000, the lender will be willing to loan $170,000. If the company chooses to pledge less liquid assets, such as real estate or equipment, it may only be offered 50% of its required financing, or $100,000.
Revenue Based Financing:
Revenue Based Financing is an upfront sum of cash that is based on a business’s future sales. Though not technically a loan, this is a great option for businesses that need access to cash quickly. Because this is not a loan, there is no APR or compounded interest associated with this product. Instead, borrowers agree to pay a fixed percentage in addition to the amount provided.
Purchase Order Financing:
Purchase Order Financing is designed to provide businesses with the cash they need to fulfill a customer order. With this option, the financed amount goes directly to your supplier to cover the manufacturing and delivery of goods to your customer. The larger the transaction amount, the lower your rates will typically be. You will have a starting rate that is determined during the underwriting process, and after the first month the rate will increase.
Working Capital Loans:
A working capital loan is a loan that is taken to finance a company's everyday operations. These loans are not used to buy long-term assets or investments and are, instead, used to provide the working capital that covers a company's short-term operational needs. Those needs can include costs such as payroll, rent and debt payments. In this way, working capital loans are simply corporate debt borrowings that are used by a company to finance its daily operations.
Sometimes a company does not have adequate cash on hand or asset liquidity to cover day-to-day operational expenses and, thus, will secure a loan for this purpose. Companies that have high seasonality or cyclical sales usually rely on working capital loans to help with periods of reduced business activity. One way of obtaining working capital is through a line of credit.
Lines of Credit:
Like a personal credit card, a business line of credit provides your business with a line of credit that is accessible to the business to use at any time. The business will only pay interest on the monthly balance on the line, and once paid, funds become available for you to use again. This is a great option for businesses who want to stabilize their cash flow or those who need short-term working capital. There are several different levels of lines of credit based on the need of the company, their ability to repay and the company credit score. (Traditional On-Demand, Facility Line, and AR Factoring)