Each year the U.S. government makes a certain amount of term-loans available each year at most banks and lending institutions. The Small Business Association's primary lending program guarantees as much as 85 percent of loans of $150,000 and 75 percent of loans beyond the $150,000 mark, with the maximum loan amount being $5 million.
With that kind of money available to a business owner, getting a guaranteed business loan could be the difference between thriving in business and closing shop. However, in order to successfully get one of these loans there are a few things you need to keep in mind.
Research Government Small Business Loans
Some institutions are well-known for giving out small business loans whereas others are a bit more stringent. The reality is that while there's a lot of talk about giving out business loans, they aren't that easy to get.
One of the reasons for this is banks and larger lending institutions prefer bigger deals so they can get some bang for their buck. That's why if you're a small business owner you need to be keenly aware of which institutions don't mind giving loans to smaller enterprises.
When it comes to attaining federal small business loans you need to find institutions that don't just talk the talk about helping entrepreneurs, they need to walk the walk as well. This can be difficult to find.
Fortunately, as of late lots of smaller lending institutions have bridged the gap between small business owners and funding. For instance, Kabbage is a small lending company that can get small business owners funded within minutes.
Government Business Loans if You Have Bad Credit
Bad credit is something that plagues many small business owners and makes it difficult for them to get a guaranteed small business loan.
The good news is there are alternatives. According to the SBA there are several different government small business loans for bad credit. There are also non-government options small business owners can use.
- Credit Partner: If you can't get a loan on your own because of your bad credit then you may want to consider getting a partner to co-sign.
- Revenue-based loans: If your business has cash flow there is a program that will allow you to get 10% of gross profits regardless of your credit.
- Credit Card Sales: Otherwise known as a merchant cash advance, this a loan small business owners can get if they have bad credit. You're given money upfront in exchange for future credit card sales. You must be very careful here because business loan interest rates can be through the roof.
- Business Credit Cards: Obtaining a line of credit via a business credit card is also a viable solution for those who cannot secure a government small business loan due to bad credit.
Know Exactly What You Need
The problem many people face when borrowing money is they don't know exactly how much they need. Often times this causes them to take out far more than was necessary and take on debt for no reason.
Before getting yourself a federal business loan you must be crystal clear on exactly what you need and be able to qualify it. This will make the process of securing and using a loan much easier.
They key to getting yourself a guaranteed business loan is to research which institutions are more likely to offer loans and what your options are after reviewing your credit. Additionally, by being crystal clear on exactly what it is you need you'll be able to further narrow down your options.