MAKE MONEY ONLINE POSTS: Best Small Business Loans

الاثنين، 7 أكتوبر 2019

Best Small Business Loans

At some point your small business may need an infusion of cash — either to get through a slow season or to unlock a more prosperous future.

For decades, your options were limited, and the loan officer at the neighborhood bank could make or break your plans.

Now, the Internet has opened up the market, and we have a growing variety of small business loans — both through direct and peer-to-peer lending.

Best Small Business Loans

With so many options for business loans, finding the right one may be your biggest challenge. Let’s take a closer look at some of the leading possibilities out there, ranging from peer-to-peer lending to short-term lines of credit.

Funding Circle: Business Loans With Less Red Tape

Funding Circle is a peer-to-peer lender. The platform connects your application with investors who would like to earn money on your loan repayment.

But don’t confuse Funding Circle with basic crowdfunding. Though it’s funded by investors and not a traditional bank, your experience will be similar to the process of getting a Small Business Administration loan. But, you can access the funds much more quickly — usually within 10 to 14 days. Your business will also need a proven track record of at least two years to qualify, and the applicant should have a credit score of at least 620.

If approved, you’ll have a term loan up to $500,000 for six to 60 months. You can avoid a lot of red tape compared to the SBA process, but your interest rate will be higher, too. Funding Circle loans range from about 11 to about 40 percent APR.

Those rates actually come in lower than some online lenders as we’ll see below. Ideally, your business can pay off this debt quickly and avoid a lot of these finance charges. Funding Circle doesn’t charge prepayment penalties.

Funding Circle Pros:

Speed
No prepayment penalty
Simplicity

Funding Circle Cons:

Not for startups
Higher rates than SBA loans

Lending Tree: A Great Comparison Tool for Business Loans

Lending Tree doesn’t loan money, but the site will connect your business to a variety of lenders which could make your shopping process much more efficient.

If you like to compare loans, you’ll probably like Lending Tree which starts by asking you a series of questions about your business: its revenue and years in operation, for example. Then, you can see a list of lenders who could meet your needs. You can either continue the process of applying through Lending Tree or simply allow the different lenders to contact you.

One of the knocks against Lending Tree over the years — the site has been in operation for more than two decades — has been the way the service interacts with your credit report. When you enter your Social Security number on Lending Tree, multiple lenders can pull your credit almost simultaneously, and each hit could lower your score.

My advice here is to not enter your digits. When you don’t share your Social Security number, Lending Tree can still generate a list of lenders and show you their rates and terms. Then you can choose whether to apply. It’s more legwork for you, but it’s worth it to control who pulls your credit.

In other words: you can use Lending Tree to build a shopping list, but you’re still doing the shopping. You will still get phone calls and emails from a lot of lenders, however.

Lending Tree Pros:

A great tool for comparing loans
Service stocked with quality products

Lending Tree Cons:

Potential for multiple credit score runs
Potential for unwanted phone calls from lenders

Kabbage: When You Need a Business Loan Tomorrow, or Today

If your business needs money right away, a Kabbage loan can deliver up to $250,000 as a line of credit.

Often, you can access this money within a day via PayPal or your existing business checking account. You can also get a physical Kabbage card in the mail within a couple of weeks. One reason Kabbage delivers money so quickly: It doesn’t run your credit as a traditional lender would. So if you have a rough credit history, you can still get financing. (You will need to have a year in business and $50,000 in annual revenue to apply.)

Kabbage is super convenient. Of course, your business would pay for this convenience through high-interest rates. By high, I mean your APR could range from about 24 to 99 percent. Kabbage does not charge a prepayment penalty. So, theoretically, you could get an emergency loan, pay it off quickly, and avoid these exorbitant interest charges.

Not so fast, though: Kabbage’s accounts front-load your interest in a way that takes away much of the incentive for an early payoff.

If your business has an emergency, Kabbage can be a lifesaver, especially if you have shaky credit. But a Kabbage loan isn’t your best bet for more strategic business borrowing.

Kabbage Pros:

Superfast access to cash
Credit scores don’t affect eligibility
The convenience of PayPal, ACH

Kabbage Cons:

Expense
Complex payback structure

Other Small Business Loans to Consider

The loans above can be easy to secure, and they offer a pretty wide variety. The next loans I’ll mention cover some of the same territories but in different ways.

OnDeck: Another Super Convenient Option

OnDeck presents another form of alternative business borrowing. It works a lot like Kabbage, except OnDeck is more suited for expansions and other one-time expenses.

Your business would need $100,000 in annual revenue, and the applicant would need a credit score of at least 600, and preferably 650 or so.

These qualifications are more stringent than Kabbage’s. In exchange for meeting these requirements, you may qualify for friendlier loan terms:

Interest Rates: OnDeck’s lines of credit top out around 65 percent APR, which is still considerably higher than you’d pay to an SBA lender but lower than Kabbage’s max of 99 percent. OnDeck’s term loans can range from 9 to 99 percent APR depending on your qualifications and loan amount.
Maximum Loan: OnDeck offers up to $500,000 in term loans for up to 36 months. Its lines of credit top out at $100,000.
Prepayment: Like Kabbage, OnDeck does not charge prepayment penalties. However, unlike Kabbage, you can save more by paying off your loan early because of OnDeck’s more conventional fee structure.

OnDeck is best suited for short-term funding, but a well-qualified applicant could use the service for capital investments or opening a new location.

OnDeck Pros:

Quick and easy application process
Options for a term loan or credit line

OnDeck Cons:

More stringent eligibility guidelines
Rates high compared to traditional lending

BlueVine: Nice Online Invoice Factoring Option

Business has a rhythm: Incoming revenue pays outgoing expenses which require more incoming revenue. It’s kind of like inhaling and exhaling. If your business gets off rhythm — which can happen because of unexpected expenses or the seasonal nature of your trade — BlueVine can help through invoice factoring.

BlueVine will “buy” your invoices that haven’t come due yet. You get your cash now, and then BlueVine collects on your invoices later, keeping the money to satisfy your loan. Of course, all this convenience comes with a cost. Your company’s APR would range from 15 to 68 percent depending on your qualifications and the amount you factor.

Loans can vary in size from $20,000 to $5 million, and the longest loan term is 13 weeks — basically one quarter in your fiscal year.

BlueVine Invoice Factoring Pros:

Speed and convenience
Rates can be competitive

BlueVine Invoice Factoring Cons:

Your customers will know you factored their invoices
You will lose part of your business revenue in loan costs

SmartBiz: Access SBA Loans More Quickly

Long before P2P and other online lending came along, the federal government created the Small Business Administration to help businesses access capital without putting their futures at too much risk.

The SBA continues to be a stabilizing force for small businesses that need to borrow funds even though the application process is tedious. Enter SmartBiz, a new service that can help you access an SBA loan more quickly and easily if you have an established business with $50,000 or more in annual revenue and at least two years of continuous operation.

These loans work especially well if you’re buying real estate for your business or opening a new location. SBA rates are tough to beat. Qualified applicants (675 or higher credit score) can get large term loans in the 10 percent range and real estate acquisition loans in the range of 7.5 percent.

And, rather than taking months to cut through all the red tape, you could have the loan in place within a week. You’ll still have to go through a strenuous application process — uploading documents, sifting through paperwork — but SmartBiz cuts out a lot of the waiting.

SmartBiz Pros:

Access SBA stability quickly
Low rates for business loans

SmartBiz Cons:

Not for startups or new firms
SBA documentation still required

Other Niche Lenders to Consider

Some of my other favorite lenders for businesses with specific needs include:

Fundbox: Great for applicants with low credit
Accion: An option for startups
Kiva: Excellent choice for microloans ($10,000 or less)

Some Final Business Loan Thoughts

As a business owner, you have options. The market is wide open for business loans which means you can get the funds you need without spending weeks or months making it happen. Business owners in previous generations didn’t have this kind of freedom.

But remember what Eleanor Roosevelt (and Spiderman’s Uncle Ben) said: Great freedom requires great responsibility. In this case, the freedom of borrowing requires the responsibility of working the new debt service into your future business plans.

So no matter how much you borrow or why you’re borrowing, make sure you’re planning for the added expense of repaying the loan over the coming months and years. That way your loan can open up new horizons without limiting your ability to prosper from the new possibilities.

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