Lack of credit is not a barrier for small business owners seeking business financing. When a small business owner plans to expand his business and finds that he has already exhausted available sources of financing and obtaining additional financing through regular sources can take too long, then financing from “unconventional” sources may be a better option. .
What would be the requirements for a business owner to obtain small business financing?
A running business
Start-ups cannot obtain this type of financing on favorable terms. To be eligible, a business must be in business for at least one year.
A minimum amount of sales per month.
Someone who has recently started the business and is generating income of less than $ 10,000 through credit card sales may not be eligible for small business financing unless the case is evaluated and considered for other reasons, such as growth potential that the owner can justify and support.
Documentary evidence
Small businesses are usually of the proprietary type. A business owner, even one with bad credit, shouldn’t hesitate to raise small business capital, even if it means paying a higher amount of interest, as it can help get you back on the path of rapid growth. Documentation is minimal. You need to present proof of ownership. The other documents that you must provide are bank statements for the last six months, proof of identity and proof of address.
An applicant may wish to obtain small business financing within 3-5 days, so they must apply online and have scanned copies of the documents mentioned above. These can be uploaded along with the preliminary application. If the request is approved, you may be asked to provide hard copies.
What is not required for the small business loan?
• An applicant does not need to have a stellar credit history.
• You may not have to provide collateral or mortgage ownership.
• You may not have to provide a guarantor.
It’s fast. It is easy. However, there are a few things to keep in mind. An applicant should consider the factor rate applied. This is a fancy term for interest rate, although it is not specifically mentioned. The refund can range from 3 months to up to 36 months and is tied to credit card sales as a percentage of daily billing or a fixed monthly amount. In case of high sales, the amortization is completed in less time. In real terms, an applicant can end up paying processing fees plus interest that can reach 50% because the loan is unsecured. The best thing to do is examine the offer and obtain such funds only from a lender who charges nothing upfront, does not charge for processing, and charges a moderate interest rate.
It’s easy to get this type of financing if you’re running a business, but repayment is the hard part. Small business owners would do well to keep in mind that they plan to use the funds to generate more income rather than pay off existing debts.