Small Business Funding FAQ
We take an in-depth look at some of the most frequently asked questions about small business loans.
Our main FAQ page is focused on questions a user might have while using our site. This is where you’ll find more general information about small business funding.
We should point out that we are not a loan provider. So while this information is general in nature, we do not mean to imply that we actually offer small business loans. If you want us to, we will try to match you with a loan provider. That said, let’s dive into some of your biggest questions.
How Do I Get Small Business Funding?
The answer to this question depends on what kind of loan you want. We recommend researching different kinds of small business loans.
If you’re having trouble deciding on a loan type, consider going with one that offers low interest. But know that this sometimes means taking on more risk. Secured loan sometimes have lower interest, but if you can’t pay back the loan, then you might have to give up whatever item you secured the loan with. In extreme cases, that could mean that you lose your business.
How Will My Rates Be Determined?
Before you’re approved for a loan, your provider will check to make sure you meet some basic qualifications. They’re sure to check if you’re a U.S. citizen, at least 18 years old, and have a real address. From there, they'll likely ask for more information about you and your business. Some of this information may be used to determine the rates you will pay for your loan.
Here’s a list of what a lender may look at to calculate the rates you’ll pay on your loan:
- The type of loan you’re applying for.
- Your credit rating.
- Your business credit rating.
- How long your business has been around.
- How successful your business is, or how much of a risk it will be to lend to you.
- Whether you’re securing the loan or not.
- State and federal regulations.
This list is not all-inclusive and your loan provider may use other factors to calculate your interest rate and fees.
What if I Have Bad Business Credit?
If you have bad credit, then you will likely end up paying more in interest and fees. You’ll also probably have fewer loan options to choose from. But it doesn’t mean you have no options.
The first thing you should do is check and see if you qualify for SBA loans geared toward struggling businesses. This type of loan may require you to take classes. The loans generally take longer to apply for than other types of loans. If you need money now, this type of loan isn’t always a viable option. But if you have the time and think you can qualify, this is the route you should take.
What if My Business Is Less Than Three Months Old?
A lot of loan providers will ask for your financial history from the last three months. This can be a problem if you are trying to fund a startup. As well it should be. Small business loans are meant for businesses that have already established themselves. A startup brings its own unique risks that are better addressed by a different financial product.
You can find more information on startup loans right here.
What is a Small Business Grant?
A small business grant is different from a loan in that you don’t have to pay the money back. This type of funding is very competitive and somewhat dangerous. When applying for small business grants, there are a few things you should be aware of:
- You may have to match the grant with your own money, meaning that you may have to take out a loan in order to qualify for the grant.
- There are scammers out there that pose as grant providers and try to steal your financial information.
- Many grants come with strings attached.
So while this type of funding seems ideal at surface level, it gets a lot more complicated when you dig into it. If you do decide to apply, we recommend going with a provider you can trust, like a government organization. Then, make sure you don’t agree with anything that may hurt your company down the road.
Do You Offer a Small Business Loan Calculator?
No, but we do recommend that you use one. A loan calculator can help you get an idea for how much you’ll need to pay each month. To get the most out of one of these apps, you’ll need to have an idea of how much interest you'll be paying and how long your loan term is. Then punch those numbers into the calculator and use the information to plan out your loan.
We’ll be posting more articles in the future with general information about small business funding. At Lendza, we want you to be as informed as possible before you take out a loan. Remember, some research now can help you get in a position where it will be easier to pay back your loan in the future.
