Low Interest Business Loans for Entrepreneurs

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If every business owner had great credit and strong financials, low interest business loans for entrepreneurs would not be necessary. But in reality, the world is filled with merchants doing business along a vast spectrum of financial situations. Some businesses have existed for many years, others are fledgling startup companies. What they all have in common is at some point they will need to borrow funds for as little interest as possible. 

One common misconception is that borrowers should accept any loan for which they can qualify. But there are many other lending options from which to choose before making a loan commitment.  It is not a good idea to automatically apply for a loan merely because it has the cheapest financing or decent chance for approval. A low interest business loan that also includes reasonable terms is available for all types of businesses.

Topics:

- New Businesses

- Specialized Industry Loans

- Other Circumstances

- Business Loan Alternatives

- Points to Ponder

New Businesses

Obtaining funding for a startup is difficult. Overall, traditional lenders do not approve loans for companies that have been in business less than two years. There are a few lenders that will offer a loan, but for very little money at high interest rates. In the past, the only options for new business owners was to use retirement money or other personal assets.  

A whole new category of online lenders has opened up to meet the needs of new business owners. They supply capital funds, often within 24 hours of an application. Business loans have been supplied to companies that were open only 12 to 18 months. Although this may seem like a perfect option, the pros and cons should be considered before applying. 

Pros:

  • Underwriting flexibility results in more loan approvals
  • Lower credit score requirements
  • Less revenue needed

By some accounts, less than 20% of small businesses qualify for regular bank loans, and that's why more entrepreneurs are seeking loan options online!

This statistic has created a market that is flooded with lenders willing to fill in the gap. The lender and the terms should be carefully researched before accepting an offer. A good place to start is by using the comparisons and reviews of specific lenders on financial websites.

Specialized Industry Loans

Another business loan niche is specialized industry lenders. Loans are provided to companies that only do business within certain industries. Since they offer very fair terms and reasonable interest rates, it is certainly a good idea for a business owner to see if their company could qualify. Included among the commercial specialized industries for these loans are: 

1. Healthcare

2. Oil and gas

3. Utilities

4. Financial 

5. Government banking

6. Insurance

7. Accounting and Taxes

The majority of these lenders work with the Small Business Association to get loans approved, sometimes for millions of dollars. These are just a few examples of the kind of companies that could benefit from these loans. There are subcategories within these industries that may qualify for even more advantages. Prudent business owners always check into this funding possibility before even considering other lenders.

Other Circumstances

Q: Are there business loans available for borrowers who are not new or in a specialized industry?

 

A: There most certainly are excellent loan options for the business owner with specific or unusual circumstances. To name a few:

  • Business owners with bad credit. Although some lenders will offer a loan with no minimum credit score required, they charge unreasonable interest and fees. Owners should apply with lenders that cater to borrowers with a personal credit score of 500 or more to get better rates.
  • Entrepreneur veterans have access to many sources for funding small business ventures. In addition to bank loans and grants, veterans can get help through the Small Business Association’s lending program for vets. Among its benefits are reduced fees and more lenient requirements.
  • There are hundreds of organizations that offer assistance and services to women who own businesses. Some government grants are available for women who own small businesses. An internet search of national women’s associations and women’s business owners will uncover a treasure trove of help and support geared toward female entrepreneurs and the challenges they face.

Whether a business is new, older, or in the planning stages, there are ways to get the money needed to keep it running. Owners can save time and money by planning in advance how much is needed, for what purpose, and how much they can afford to pay each month. Then it becomes a matter of searching for lenders that seem to be a good match to get the capital that is needed.  

Business Loan Alternatives

Since low interest business loans are widely available, they are the most popular choice for financing. But they are by no means the only solution to obtaining business financing. There are other ways to create opportunities to get things running, and millions of business owners have seen success with these alternatives, which include:

Using a business credit card means having access to a revolving credit line. The cards can earn rewards and cash back, and they have higher limits than personal credit cards. 

Marketplace lenders place prospective borrowers with investors who are interested in specific small businesses. For instance, some investors want established businesses, or veterans, or entrepreneurs that want capital to buy inventory. Terms and requirements are very specific, which means borrowers must research very carefully to see if they qualify.

Merchant cash advances allow business owners to get cash upfront if they agree to pay the money and fees back from the credit card sales of a given day. This type of funding has become easier and less expensive with companies like PayPal and Square, who take their fees off of the top of each credit card sale.

Other financing methods include invoice factoring, in which money is borrowed against verified unpaid invoices. Crowdfunding is another alternative to using personal credit or getting a business loan. And there’s always the possibility that friends or family members will be willing to put up cash to start a business or keeping it up and running.

Other financing methods include invoice factoring, in which money is borrowed against verified unpaid invoices. Crowdfunding is another alternative to using personal credit or getting a business loan. And there’s always the possibility that friends or family members will be willing to put up cash to start a business or keeping it up and running.

Points to Ponder

Qualifying for a low interest business loan is the ideal financial solution, although it may not be feasible for every borrower. Before accepting a loan, business owners may consider waiting until their business or personal credit score is higher to save thousands of dollars in interest. Owners should take time to assess their individual situation in order to make the best financing choice. Qualification for low interest business loans will depend on:

  • Personal and business credit scores
  • How long the they’ve been in business
  • Whether the money is needed immediately
  • How money is generated

No two businesses are alike, and the same goes for their financing options. With these four factors as a guide for instance, a merchant can get an idea whether they should try for a traditional low interest business loan (good credit), crowdfunding (startups), or invoice factoring (businesses that bill clients with invoices).

For even further guidance, small business owners should network with others to get ideas and support. Accountants, attorneys, and other business professionals offer low-cost consultation to answer any questions and steer owners in the right direction. It may take time to create the winning combination, but trial and error will eventually pay off when the doors to the new business open wide and stay open. 

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Sheila Kay

Sheila Kay is an author, ghostwriter and editor residing in the Atlanta, GA area. Among her favorite writing genres are creative nonfiction, self-improvement, and finances. Her first published book, PTSD and the Undefeated Me, is a memoir which has been a stepping stone to her involvement with mental health advocacy for military and civilian men and women. She is currently working on the first fiction novel to be published under her name. For more information or to purchase her books, visit Sheila’s Author Page on Amazon.com.

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