LookingForBusinessLoan.com has been developed with the concept of providing entrepreneurs of all levels with insights into the lending industry. This includes business people, who for one reason or another, do not have the best credit. However, while credit is extremely important in the world of lending – it is not the be all and end all of the lending industry. It is certainly true that having good credit, if not great credit, is an extremely important part of the debt capital raising process. Banks, finance companies, and other lenders are now looking for extremely good credit scores as they make their lending decisions. However, if you have had past credit issues – this should not be a roadblock to your success. As discussed in our previous articles regarding alternative methods of financing and credit scores and business loans, there are a number of options still available to you if you are looking for business loan and other types of business credit facilities.

 

If you do have bad credit and are looking for a business loan then the first step is to speak to a credit counselor or your CPA. These individuals (or firms) can assist you greatly in removing issues that are hindering the advancement of your credit score. As lending has become a much more scientific process, it is imperative that your issues pertaining to previous lending issues are resolved prior to attempting to obtain credit.

 

These firms can advise you how to properly clean up your credit report prior to approaching a financial institution or bank. Additionally, there are many other options available to you in your search for capital. As we have discussed previously, angel investors, private investors, and venture capital firms are an excellent source of capital if you cannot raise capital through traditional lending methodologies.

As has been one of the common themes through our article discussions, banks and finance companies love to provide business loans that are secured by tangible goods such as equipment and real estate. This is, again, because in the event of a credit default they will be able to recoup a majority of their principal by taking possession of the secured property with the intent to resell it. In regards to equipment business loans, there are a number of different avenues that you can take in order to acquire the equipment that you need for your business. In many instances, the equipment seller or manufacturer will have a number of lenders that they can refer you to when you are looking for business loan specifically for equipment purchases. Major corporations and manufacturers often have their own in house financing programs that you can apply for when purchasing large scale equipment. This is especially true for machinery that costs in excess of $25,000.

 

Equipment loans, as compared to traditional loans, are much easier to obtain as there is fully security for the lending party for the equipment they are providing to you. As an alternative to equipment loans – there is the equipment lease. Much like a business loan, you will be required to submit a formal application and you may be required to present a business plan. However, full title for the equipment (should you decide to lease it) remains with the finance company or manufacturer that is providing you with the equipment. Additionally, the full cost of the lease is generally deductible for tax and accounting purposes. This is because you are not purchasing the equipment. In a lease situation, you are paying for the depreciation of the equipment plus an interest rate tied to the depreciation of the equipment.

 

While the primary focus of our discussions has been regarding the 7a SBA Loan, there are a number of other types of loans that are guaranteed by the Small Business Administration. These include the SBA 504 loan program, the Microloan program (which has some overlapping features with the SBA 7a loan), and the disaster assistance loan program.

 

The foremost guarantee program besides the 7a is the SBA 504 program, which is also known as the CDC loan (“Certified Development Companies). This highly specialized lending program is specific for providing long term and fixed rate financing to acquire large assets such as real estate or equipment. It is specifically designed for traditional businesses that operate “brick and mortar” type facilities. For instance, this type of loan would be most appropriate for a small scale manufacturer that needs a large fixed rate loan to purchase a new piece of manufacturing machinery. If this is the primary need of your financing then you may want to look at this program as an alterative to the 7a SBA loan. The maximum loan amount via the SBA 504 program is $1.5 million or $2 million if the business conducts business with the federal government or a state government.

 

The Microloan programs provided by the SBA provide financing for businesses that need less than $35,000. These loans are primarily used for ongoing inventory purposes, cash flow management purposes, or inventory acquisition purchases. This is also one of the small business lending programs that is available to not for profit foundations (although they can only be used for purposes the benefit the community).

 

Finally, there is the disaster assistance loan program. Unlike other aspects of SBA programs, this loan can be used by individuals. However, this is not a frequently used program as it is specific only to when major disasters occur.

 

As we have stated before, the SBA provides a tremendous amount of flexibility when seeking business financing. Despite the fact that this site is dedicated primarily to the 7a SBA loan, there may be a number of other financing options that would be well suited for you needs.

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