SMALL BUSINESS LOANS

In today's fast-paced business environment, access to quick and reliable funding can make a significant difference in the success of your business. 

It’s why many businesses and business owners turn to small business loans from reputable and respected lenders, like Yardline.

Let’s explore what small business loans are and how to get the best small business loans available.

WHAT IS A SMALL BUSINESS LOAN?

Small business loans are a fast, easy, and effective way to obtain financial relief. They allow a company to borrow capital from a creditor and set a timeframe for that money to be paid back with interest.

 

Well established businesses with good personal and business credit history often seek out small business loans in order to grow by buying more inventory, launching new products, expanding their business, and hiring new employees. Additionally, this capital can be invested into the business for improvements such as renovations and technology. 

 

Banks and other lending institutions typically look at the condition of the business, the available collateral, the cash flow, and character in order to determine approval for a small business loan.

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PROS AND CONS OF SMALL BUSINESS LOANS

Pros

      Expediting your businesses' growth - The funds from a small business loan allow businesses the ability to put their plans for growth into action sooner, rather than waiting on the business to make enough profit to fund expansion on their own.
      No investors needed - Small business loans provide capital without investors and a dilution in equity. Business owners can maintain full ownership of their businesses and their profits. And, once the loan is paid off, business owners will no longer owe anything to the lender as well.   
      Flexible use of the funding - Investors typically will have a say in how a business uses its money. Small business loans, however, often have little or no restrictions as to how the money is used.
      Less costly than other forms of financing - Credit cards, overdraft fees, and personal loans all come with their own, and higher, set of risks and interest rates. Small business loans, on the other hand, offer lower interest rates, especially if a business has been in operation for a number of years and has a strong credit history.


Cons
      Extensive application process - Lenders extend financial assistance based on the company’s ability to pay. As such, they generally require an extensive application process and ask for:

  • Time in business
  • Personal and business credit scores
  • Annual revenue (or monthly sales)
  • Bank statements
  • Personal and business tax returns
  • Purpose of the loan
  • Personal background and character
  • Business plan with projections
  •  Collateral
  • Relevant legal documents
      Business assets can be at risk - Many financial institutions will require business owners to offer collateral in case they cannot make their payments on time. Thus, if you put your business as collateral, and default on your small business loan, you could lose your business completely.
      Strong credit profile and history required - Both the business and business owner’s credit score will be used to determine the interest rate on the small business loan. And, depending on the rating, business owners could end up paying much more than they’d like for the loan.
      Lack of flexibility - Most commercial small business loans’ terms are not flexible. Business owners ask for a certain amount of money, agree to regular monthly payments, and will be committed to repaying the loan in that time frame.
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HOW TO KNOW IF A SMALL BUSINESS LOAN IS RIGHT FOR YOU 

Small business loans are a great way to grow a business without diluting its ownership. Plus, they offer business owners the flexibility to use the funds how they set fit and if they have a strong business and personal credit history, they will likely qualify for favorable rates and terms.

 

However, if your business revenue tends to fluctuate or you need the money quickly, you may be better off with other lending options that have more flexibility in terms of repayment or approval time.

 

Ultimately, determining if a small business loan is the best option will be a personal decision based on your needs and plans for the capital, your creditworthiness, and risk tolerance.

HOW TO GET A SMALL BUSINESS LOAN

The biggest difference between Yardline Growth Capital and a Shopify Capital Loan is flexibility.

Shopify may not be the only place where you are running your ecommerce business, so why should it be the only place you can use capital? At Yardline, we give you complete flexibility regarding how and where you spend your growth capital, allowing you to use the money in the way that makes the most sense for your business. For example, you may wish to use it to purchase additional inventory, invest in new marketing channels to grow your customer base or expand to additional marketplaces. We give you full control of how and where you use capital from us.

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