Many business owners need additional funding, whether they run a startup or a thriving business. Learn how loans can help you realize your financial goals.
Build your venture with a business loan.
It’s business (loan) time.
Business loans are like any other form of loan — lenders offer them to businesses in exchange for payment on the value of the loan (known as principal) with added interest.
Business loans come in dozens of different varieties and forms, with various kinds of repayment plans. Knowledge about the most common types can help you navigate which one might be right for your business, and even help you discover opportunities you weren’t aware of.
While there are many different types of loans, there are two broad categories: private and federal or state-subsidized loans.
Federal and state loans
For small businesses, there are several loan options available through the US Small Business Administration. While there are many loan types that fall under the SBA’s umbrella, the most common are PPP loans and disaster loans.
PPP (Paycheck Protection Program) loans were recently established in 2020 to offer low-interest loans to businesses who need to subsidize employee wages after economic hardship due to COVID-19.
SBA Disaster Loans are also designed to help with businesses hit hard by the pandemic, but they can also help businesses that have been negatively impacted by a disaster like a hurricane or forest fire.
Many states and the federal government also offer low-interest loans and grants to many different business sectors. That list is a bit more extensive than can be listed here, so take the time to explore what aid and loans are available for businesses in your industry, and you might unearth some excellent opportunities.
When you start looking to the private sector for loans, the results can be hard to understand if you don’t know what you’re looking for. There are hundreds of lenders and thousands of different financing options. But if you have a rough idea of the total principal amount of the loan you need, and what interest rate you can handle, you’ll be able to sort through most of the chaff pretty quickly.
Most commonly, you’ll find a private business loan through a bank, but there are also independent lenders and credit unions that have options as well. However, make sure to keep an eye on interest, as private lenders often have higher rates.
Choosing the right loan for you.
Whatever type of loan you’re looking for, you want to make sure that you find one that suits your business needs, has an appropriate repayment plan period, reasonable monthly payments, and good terms and rates. There are many different repayment terms for a loan recipient, and long-term and short-term loans are a possibility. Loans are also subject to refinancing — renegotiating the payment terms of a loan after some of it has been paid.
When it comes to searching for small business loans, remember: you’re the client. These lenders are selling to you, not the other way around. Taking the time to shop around will get you an array of rates, options, and terms to choose from. Borrowers have the power.
Some types of lenders to look into:
- Direct online lenders
- Commercial banks
- Local community banks or credit unions
- Peer lending sites
- SBA loans and SBA loan programs (including coronavirus assistance)
- Microloans (loan amounts up to $50,000)
When you’re making the decision to take out a loan, it’s important to have a sense of your goals and to have near-bulletproof accounting. Taking on debt is an essential part of the lifecycle of many businesses, so be sure to create a balance spreadsheet that shows how much money you’ll need to have coming in to offset the servicing of your debt.
When you’re doing all this paperwork, Adobe Acrobat can be a vital part of the process. Adobe Document Cloud helps keep your documents organized and accessible anywhere, on any device. And, if you’re going to be working in and out of the Microsoft Office Suite, the cross-compatibility with Adobe apps makes pulling together presentations and documentation more streamlined and easy.
Business loan application steps.
There are three parts to preparing for and applying to a lender for a business loan.
First, you’ll be assessed by a lender before you can dive too heavily into the documentation process. The three primary factors that will determine your eligibility for a loan are credit history (business credit score), cash flow (how much money is moving through your business currently), and available collateral (property and other assets you offer or put up to secure the loan).
These factors will determine how much you’ll be able to apply for, whether you’re seeking a private loan or one through the SBA. If one of these factors isn’t in great shape, that can affect the overall loan availability. But a strong showing in one category (for instance, if you have many assets as collateral) will help you get a larger loan or overcome bad credit.
Compile the document haul.
Next, the lender will likely ask for more documentation. This is a great time to start organizing things in a cloud library for easy sharing and access. Document Cloud can provide the assist with a searchable online library of all your important documents.
The most commonly needed documents to have available are:
- Tax returns and tax documents
- Credit score information for both yourself and your business
- Business and personal bank statements
- Business plans, including a growth plan
Acing the application process.
Once you’ve got all the documentation together, and you’ve passed through the initial assessment, it’s time to work through the full loan application.
If you’ve done your due diligence, this part shouldn’t be too difficult. But it can be a pain to print, scan, and send all sorts of documents. With Acrobat Sign, you can organize, manage, and securely sign all the documents you need for a loan application with a minimum of fuss, and most loan applications will allow digital signatures. Plus, there are many useful templates to help you get started. Extra funds are only a few documents away.
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