Where Do You Get a Loan for Buying a Business
Many small businesses struggle with being under-capitalized. They operate for years but cannot afford the investments in production capacity, marketing and branding necessary to grow their business.
Given the constraints that lack of capital can impose on the growth of your business, you should consider loan financing as a way to access growth capital. There are many loan types you can qualify for. In this article, we cover the requirements of some loans you should consider.
Qualifying for FEMA Small Business Loans
Did you know that if you live in an area that's recovering from a natural disaster, you could be eligible for special business loans as part of disaster relief? The Federal Emergency Management Agency (FEMA) helps alleviate disaster and provide emergency assistance. President Jimmy Carter created FEMA in 1979 to help the nation and communities quickly recover from disasters, whether man-made or natural. FEMA works with the U.S. Small Business Administration (SBA) to coordinate relief.
If your area suffered a natural disaster, you might be eligible for a small business loan from SBA. If so, you should apply quickly. In case your application is turned down, FEMA has other grants that can help you get back on your feet.
A cash advance business loan can sometimes be a great option if your small business needs working capital. A cash advance business loan lets you access funds now from a creditor that you will pay back from future sales.
The issuing financial institution will want to see your business and sales track record. This is to ensure that you make enough money in the business to be able to pay back any cash advances. In the future, you will pay back a certain percentage of sales each month to the creditor.
Cash advance business loans are great because you do not pay back a fixed amount. Rather, the percentage of sales is what's fixed. This helps alleviate the burden on your business when sales are slow.
Requirements for Agriculture Business Loans
Agricultural business loans are available from major banks as well as various financial institutions. In addition, states in which agriculture is an important economic activity typically have state programs that offer agriculture business loans to qualified farmers.
To access these loans, you may be required to provide proof of the following and similar requirements: Proof of U.S. citizenshipProof of residency in the state in which your agricultural business is locatedProof of your legal business entity, such as sole proprietor, LLC, partnership, and the likeProof that your business adds value through some aspect of agricultural production and produce supply
Qualification Requirements for Food Truck Business Loans
Food truck businesses can generate good money, but the costs of starting one involve some capital outlay. You have to buy the food truck, along with all the equipment you will need, as well as have a budget to operate on while your business strives to become profitable.
You can obtain food truck business loans from banks, though these have stringent requirements. They prefer you to have a well-established food-truck business and are less likely to take a chance on an upstart. However, other financing options like cash advances or equipment leasing can help.
Interest Rates for Business Loans
To make financing work, you must pay attention to the interest rates that your loan carries. Using a business loan calculator, you can found out how much the loan will cost you in interest payments back to the bank or other lending organization.
Interest rates vary by lender and business type. Some typical annualized interest rates for different lender types will be in the following ballpark:
- Online lenders – 10%-70%
- Regional banks – 2.5% – 5.4%
- National banks – 2.5%-5%
While alternative lenders like online lenders offer the most flexibility concerning loan eligibility, their interest rates tend to be the highest. You should therefore view them as a lender of last resort. If your business needs capital, try the banks first, in case they can offer more favorable terms.
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Where Do You Get a Loan for Buying a Business
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