3 Ways To Get A Small Business Loan Credit Cards

3 Ways To Get A Small Business Loan

30 Mar, 2010 Credit Cards Business Small Business

With the current economic climate, small business lending has plunged by approximately 7.5 percent in 2009, the largest decline since 1942, according to the Federal Deposit Insurance Corp.

However, companies with sound business strategies still can borrow. Options include loans from traditional banks and institutions affiliated with the Small Business Administration, as well as financing from Internet-based lenders.

Banks

The best place to get a small-business loan is still a bank, Cloutier and other experts say. Banks typically offer the lowest interest rates and many have established reputations as trustworthy lenders.

But today, small businesses must expand their search to find a bank willing to lend. Many small businesses try three or four banks and then stop looking but a more persistent approach has better odds of success.

Take out the phone book, target 10 banks and work through that list. With enough aggressiveness, you will find who might be able to make loans.

The key to success with banks today is to show past profitability, and to describe a well thought-out plan for future profits. If you aren’t making a profit now, you must be able to tell the bank how you will change that in the short term, or you really won’t be able to get a loan.

It is recommended that as a business you start small in their loan requests.

SBA loans

Another way to find a bank loan is through the Small Business Administration, or SBA. The SBA can direct you to banks that offer loans guaranteed by the agency. This way, you’ll have the advantage of approaching banks specifically interested in lending to small businesses.

In the fourth quarter of 2009, banks made 14,386 loans guaranteed by the SBA, up 38 percent from a year earlier. The gain stemmed largely from increased guarantees and reduced fees approved by Congress and the White House, says SBA spokesman Mike Stamler.

Such measures were part of the stimulus package and were originally scheduled to expire on March 28. However, Congress recently extended the fee reductions and loan guarantees through April 30, or until funds are exhausted.

For now, interested businesses should contact the SBA office nearest to them, which can be found on the agency’s Web site.

Banks granting SBA loans are placing increased emphasis on business plans, cash flow and profit forecasts in deciding whether to lend, she says. The SBA also can refer businesses to free counseling centers to improve their performance.

Online Small Business Loas

Another source for loans is the Internet. There are several sites where businesses can seek alternative lenders such as individuals and small companies.

One such company is the Rapid Business
Advance Company which offers a streamlined process that provides a simple one page application and immediate unsecured funding from $2500-$600,000. They tend to have high approval rates, minimal credit requirements, and a flexible repayment process that is directly tied to your business’ sales volume. Interest rates are much higher than banks or SBA Loans. Interest rates usually start from 8 percent. While that’s generally more than a bank will charge, it’s much less than what you’ll have to pay on many credit cards.

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