Business Loans & Small Business Financing

Business loans for small businesses seeking financing can be a tricky monster for those that don’t understand how to navigate the labyrinth of loan types and underwriting requirements.  In the world of small business financing, business loans come in a variety of categories.

Business Loan Categories

When talking about small business financing there are two basic categories that small business loans fall into, Equipment Loans and Small Business Loans.  Within those two basic categories there are subcategories to be sure.

Dividend America Commercial Lending EquityFor example, a sub category of the small business loan sector may be businesses with real estate involved as collateral in the business loan transaction.  In the Equipment Loan sector one may see strictly new equipment involved while other equipment loans might include the refinance of existing equipment.

Understanding what type of business loan one needs will help in the understanding of pricing of the loan.  Equipment loans typically have a higher interest rate and more points that would is typical on a standard small business loan.  However, business loans that involve real estate as collateral (an office building, warehouse or manufacturing facility) typically have the lowest interest rates and the least points.

Preparing for a Small Business Loan

Knowing and understanding what type of small business financing a business qualifies and should seek is half the battle to creating success.  Preparing for the business loan and understanding the documentation that will be required can be daunting but is necessary.

Don’t go it alone!  Many times to start all that is needed is a summary of the needed financing, call he “ask.”  The ask is not necessarily an executive summary, it is a pitch of sorts that explains the basic need.  Think of it as a high level review of what the executive summary will say.

Additionally, a proforma, P&L and/or balance sheet are all good initial documents to have on hand at at the ready.  The start of the business loan process is basically a high level review to see if your deal type fits with the small business lender’s business loan risk profile.  Be ready with basic financial documents at a moments notice and remember not to ‘flood’ the processor with documents but provide exactly what is requested in a timely manner.

Small Business Loan Experts

American Equity GroupFinally, don’t be afraid to ask!  Many small business professionals are afraid to look uninformed and therefore don’t ask questions during the process.  The best small business loan experts actually prefer for the sponsor or borrower to ask questions so that everybody stays on the same page.

To find out more about small business financing and how to successfully apply for a business loan contact the small business loan experts at Dividend America Commercial Lending.  Apply online using the easy app or email your deal summary (ask) to Michael Gross at (404-819-4511) for business loans and small business financing.