Expand your business or refinance debt with a loan secured by your choice of collateral. We’ll help you get the financing you need with fast loan processing times and flexible terms.
Types of Business Loans
This may make financial sense if by refinancing, you get a better interest rate than that charged for your original loan. When you apply for a business loan, typically you’ll have to disclose what you plan to use the money for and how you plan to repay it. Other business loans are unsecured, meaning that they don’t require collateral. Getting an unsecured loan depends on the size and age of the business, relationship history with the lender, and other underwriting factors. They can provide smaller businesses that have less credit history access to needed capital. There are different types of business loans, each suitable for a different purpose and a different type of company. You’ll first have to be able to demonstrate a track record of financial success to get a business loan with bad credit.
Business Loans
Once a lender issues you a line of credit, you can withdraw funds up to a certain amount to cover business expenses and only pay interest on the amount you borrow. Assumable mortgages have existed since the 1980s, when rates reached an all-time high of 18.6%. Payment structures differ from company to company, but most require you to repay as your clients pay you. Financing companies often charge a one-time fee as a percentage of total invoices, while others add an additional percentage for each week the invoice stays outstanding. The DSCR uses your net revenue or EBITDA divided by monthly debt payments.
Best for Short-term Loans
Factoring companies generally buy invoices for 70% to 95% of the total invoice amount and charge factoring fees of 0.5% to 5% per month until the invoice is paid. If you default on a business loan, the lender can seek to recover its losses from you or your business if you took out a secured loan or signed a personal guarantee. Before backing a loan with collateral or a guarantee, it’s crucial to have a plan to repay the loan and to know the implications if you default.
A mortgage is a loan used to purchase or maintain real estate. Certain links may direct you away from Bank of America to unaffiliated sites. Bank of America has not been involved in the preparation of the content supplied at unaffiliated sites and does not guarantee or assume any responsibility for their content.
Factor rates generally range from 1.2 to 1.5, which may be equivalent to APRs from 40% to 350%. Invoice financing, on the other hand, involves borrowing money that is secured by the business’ outstanding invoices. In this case, the business must still collect payment and then use those funds to repay the loan.
The best business credit cards typically require good-to-excellent credit. But some, such as the Spark 1% Classic, are How Can I Get a Business Loan open to fair credit borrowers. Every lender sets different lending requirements that it approves for business loans.
If you want to qualify for a larger business loan amount, you’ll need to present a strong application. That means applying with a strong credit score, a proven track record of profitability, a high DSCR and a low DTI ratio, among other things. Emily Maracle is a small business loans editor for Bankrate.com. She is passionate about creating high-quality content to help educate and make complex topics accessible to all readers.
Borrowers can choose from loan terms between three and 24 months. While excellent credit isn’t needed to qualify, the higher your credit score, the better your interest rate will likely be. Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. Small Business Administration financing is subject to approval through the SBA 504 and SBA 7 programs. Actual amortization, rate and extension of credit are subject to necessary credit approval.