A number of online lenders are giving banks a run for their money. They are making the lending process convenient, providing a quick turnaround and offer transparent, flexible lending terms. If you are short on time, online lenders will be your best route.

Peer to Peer online lending has become very popular. If you are new to this, individuals place their money with an online business loan provider who invests your capital with small businesses. The conditions for borrowing and the APR will be very similar to the traditional bank requiring information like:

• Years in business
• Profitability
• Debt serviceability
• Financial statements
• Personal guarantees may be required depending on years in business and profitability

Preparation to Apply for a Small Business Loan 

This chart explains the reasons for credit denial in the USA. What can we do to repair these issues before applying?

• Credit History - History is time, our success and failure. Living through all of it and still being around to talk about it.
• Collateral - You require the security to obtain the loan and they probably want your house or already have it.
• Debt - How can you cut costs and pay off debt?
• Credit Score - If your credit score is poor, you need to take the time to manage it. If you can manage a company, you can manage your credit score. you need to make it a priority.
• Weak Business - Evaluate your company on why it's weak. Economy, partners, relevance and are you still excited to be in the business.

Peer-to-Peer Lenders: 

Lending Club Business Loan

Lending Club - Since 2007, Lending Club has been bringing borrowers and private investors together.  They represent a group of private investors (peer to peer) that lend to individuals and small businesses.  They require personal guarantees on loans under $100,000 and a UCC-1 lien (assets within the company) on loans over $100,000.  The personal guarantee and lien allows Lending Club to seize liquid assets should your business default on payments

Lending Club Review

Apply Here

When to use Lending Club 

• You own at least 20% of the business and have at least fair or better personal credit
• Your business needs quick access to cash
• Minimum of $50,000 in annual sales
• 12 months or more in business
• You and the co-owners are U.S. citizens
• You and co-owners are permanent / non-permanent residents with valid documentation

Do not use Lending Club if:

• Your company has not been in business for over 12 months
• Your credit is poor
• Your business does less than $50,000 in annual sales
• You have declared bankruptcy
• You and or the company have tax liens

Small Business loans Under $250,0000

Have you heard people say that its way easier to borrow a lot of money than a smaller amount? Usually, with larger loans, companies are well established and have the backing to support the loan.

Small Business Loans (Direct Lenders)

National Funding has supported small businesses since 1999, lending over $2 billion to help American businesses grow. National Funding has grown to become one of the nation's biggest small business lenders by providing funds in as few as 24 hours, offering businesses early payoff discounts, and a personalized loan experience businesses can’t find anywhere else. When borrowing from National Funding, businesses are creating a lasting partnership with experts in the industry.

National Funding Review

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One of the country’s largest private lenders of business loans from $5,000 to $500,000.

• Superior customer service
• Early payoff discount
• High approval rates
• A+ Rated with the BBB
• Established in 1999, National Funding has been in the lending business far longer than other lenders
• No collateral required
• Cash in hand in as little as 1 business day

National Funding Business Loan

Merchant Cash Advances up to $250,000 to small businesses whose credit card transactions are over $3,000

• National Funding offers financial options for small businesses with poor credit.
• Alternative Lending - if you are contending with limited or no collateral, a poor credit situation or minimal profitability
• Quick approval process
• Merchant Cash Advance - allows business owners to obtain the cash they need and repay it based on future consumer transactions rather than their credit score
• Working Capital loans offer business loans that are both flexible and easy to get approved
• Equipment leasing up to $150,000

Applying For Business loans Online

More business owners continue to request online business loans every year.

OnDeck - To qualify, owned your business for one year and earn $100,000.00 in annual revenue. Up to $500K, higher interest rates and short-term of only two years. APR rates from 19.99% to 39.99%. If you need cash quickly, they are an option. If you have a proven track record with your company, there are better options than OnDeck. 

OnDeck Review

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• A+ Rating with the Better Business Bureau and a 9.7/10 rating on Trustpilot
• Terms Loans up to $500,000  with 3-36 month terms  starting at 5.99
• One time origination fee of 2.5%-4%
• Lines of Credit up to $100,000 starting at 13.99%
• The decision in Minutes with no Obligation
• Time in Business requirement is 1+years
• Loans available in the USA, Canada, and Australia
  
  

Kabbage Working Capital - Fees are 1.5% - 12%* of your selected loan amount. Every month, you pay back 1/6 of the total loan (for six-month loans) or 1/12 of the total loan (for 12-month loans) plus the monthly fee. There are no early payment fees, so you can pay early and save.

Kabbage Short-Term Working Capital

Each draw is an agreement between Celtic Bank and you. Draw your line as often as once a day. Pay only for what you take.

*Kabbage's maximum rate for each month is 12%. Third party partners may occasionally charge up to an additional 1.5% for each month.

Term Disclaimer: After you apply, we will inform you if your loan request qualifies for a six-month term or an optional 12-month term. A minimum loan of $15,000 is required for 12-month loan term. Eligibility for 12-month loan terms is subject to availability and can change based on underwriting criteria. Changes in future term availability do not affect outstanding loans.

Small Business Loan Requirements

When a small business requires additional capital, most take money out of their personal savings account. It is fast and immediately available. For the newer companies that have not had time to build a bankroll, going to lenders for additional capital becomes the best option. Depending on how long you need this capital will determine the type of financing. If you can apply for a credit line secured against assets, that can be the first step.  

As you can see by the offerings by the online lenders, the traditional bank and Credit Union is still your best option for the larger amounts of capital. Banks approve approximately 20-25% of the business applications that the process and in most cases, you will require a 20-30% down payment included with the loan. This low funding rate is the reason online lenders are growing. 

The Bank

For many of us that operate our own business, we go through the same process with the bank every year. We deliver our financial statements to our lenders right after our accountant provides our year-end statements. They view financial statements by looking at the debt to equity ratio, equity position and profitability compared to past years and discuss our goals for the following year. 

We look at the amount of operating credit line the bank will provide for the upcoming year and the interest rate. If we have stayed in our credit line for a large percentage of the line, the bank will request to move this to a loan and reposition on the operating line. 

America Loan Service has no affiliation with Wells Fargo. We like their application process for small business.

Wells Fargo Business Loan

The interest rates that we have had offered with our bank for our credit line over the past five years has remained relatively consistent at 6%, and a new business loan is approximately 8% with a very flexible payout term up to 10 years.

The Loan Process with the Bank

The amount of time required to go through the business loan process with small business has been 45 to 60 days. For larger companies, they can take a year or more depending on what is required.

They will require a business plan explaining where the capital will be used and three years of financial statements. If you are new to this process or you are approaching a new bank, the list below of documents required for the SBA loans will apply to bank and possibly even more information.  

Credit Unions

If you are a newer company or generating under $100,000.00 / year in business, the local Credit Unions are an excellent alternative to on-lenders, and banks and they work with the SBA loan program. The Small Business Administration is not a direct lender; they provide security to the Credit Union to ease the risk if borrowers default on the payment. Check them out to see if they have a program that fits your business requirements. You will need approximately 60 - 90 days to go through this process and will require a complete business plan that includes:

• Profit and loss statements
• Business overview and history
• Financial statements
• Income Tax returns
• Resumes for yourself and partners
• All corporate license and business certificates
• Personal financial statements
• Personal history resume

We would also recommend that you look into the SBA loans offered by the Government to see if you qualify for their programs.

Credit Union Search Directory

The lending process with the Credit Unions is similar to the banks at 45-60 days, and you will be required to spend a great deal of time in preparing your documentation. If you can qualify with the Credit Union, we strongly recommend that you try to work with them, especially if you are starting out and have limited option with banks and online lenders.    

In conclusion:

• Start looking for money as soon as possible. If you need to go fast, it is going to cost you.  
• Work on the business plan and keep it in a state of preparedness. (We should all be running our businesses from our business plan right If we only had the time.) 
• Research the SBA loan program to understand how you can qualify and what is excepted in the program. The SBA loan takes some of the financial risks off of you, but you need lots of time to work on this. 
• Get to know your banker and build that relationship. It will always pay off for you.

Tips on Cutting Banking Fees within our Business

Here are a few of the steps we have taken to reduce operating costs in our business: 

• We approached our customers to receive their monthly invoices online eliminating postage and paper
• Email out invoices the day they're created stopping the excuse that the invoice is lost in the mail. Today, 60% of customers pay online
• Scan checks at your desk into a machine that is available from the bank eliminating the need to go to the bank saving time and processing fees
• Depositing into the bank by taking a picture and filing the check for a short period. 
• Set up a business credit card to purchase meals, fuel, and any expense that our vendors will allow us to pay by credit card lowering transactions recorded at the bank 

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