Getting a business loan may seem like a daunting process, but it doesn’t need to be difficult. There are many situations where you won’t have the capital you need – whether it’s to fund a new venture, take advantage of a growth opportunity, or invest in something essential like new equipment. But the idea of going through the application process puts many business owners off even trying. Some think it’s difficult, with endless application forms and paperwork to complete. Others worry that they won’t be accepted for a business loan or it’ll affect their personal credit score. While these are valid concerns, the good news is that modern business loans are much simpler to apply for than they used to be. In this article, we break down the different types of business loan available and exactly how easy or difficult it is to get them.
Are Business Loans Difficult to Get?
Securing a business loan doesn’t need to be difficult if you know what you’re doing. There are some factors that can make the process simpler (or more complex) so it pays to know a bit of background. The loan type and lender you choose will both have a big influence on how difficult it is. Some types of loan are harder to procure than others and some lenders have a more complex application process than the rest. The key to making things simple is doing your research up front and select the right type of loan and lender for your situation.
Business Loan Types – Ranked by Difficulty
The type of business loan you choose will affect how difficult it is to obtain. Purchase order financing, accounts receivable lines of credit, and equipment financing tend to be the easiest. Loans from the Small Business Administration (SBA) and commercial mortgages sought through traditional banks are usually at the harder end of the scale. A business line of credit or small business loans that aren’t from the SBA sit somewhere in the middle (with the latter being even easier from alternative providers like us). Here are the different types of business loan available, ranked by difficulty.
Easy – Accounts Receivable Lines of Credit and Purchase Order Financing
Accounts receivable (AR) funding and purchase order (PO) financing are an easy source of cash. They allow you to sell off your invoices and receive the money immediately, which can help cover your costs of labor, increase your stock, or boost cash flow when customers are slow to pay.Alternative lenders provide the easiest methods of securing AR funding and PO financing. Most have a quick and simple approval process, without the need to meet criteria like minimum operating durations, credit score cut-offs, or annual revenue requirements.
Easy – Equipment Financing
Equipment financing packages usually have qualification requirements that are quite easy to meet. This can make the entire process quick and painless, so you’re able to secure new equipment without delay. Many equipment suppliers offer finance solutions as part of their service and have existing agreements in place with their preferred vendors. Although their interest rates or other terms may be less competitive, they’ll handle much of the application process for you. Many of our customers also use specialist equipment financing or small business loans to secure new gear, since they offer the same simple application process but benefit from better rates and terms.
Easy/Difficult – Small Business Loan
There’s no clear-cut answer for small business loans since their difficulty to obtain can vary dramatically. Loans from the small business administration are popular because they offer low rates of interest, long repayment terms, and large approval amounts. However, they’re also one of the most difficult types of business loan to obtain because they have particularly strict approval requirements. You’ll need a near-perfect financial history and top-notch credit score to be in with a chance, which for many businesses simply isn’t realistic.
A much easier option is to seek a small business loan from an alternative lender like Strategic Capital. All we ask is that you’ve been trading for a minimum of 6 months, have a personal credit score of 500, and are generating at least $10,000 a month on average. In return, we offer competitive interest rates that are far below comparable lenders, so that every business can achieve their potential.
Difficult – Commercial Mortgage Financing
If you’re considering relocating your business premises or want to finance the purchase of commercial real estate, then a business mortgage may be the best option. Unfortunately, they’re also the most difficult type of business loan to obtain if you go through traditional channels. However, if you look into alternative lenders then you might be pleasantly surprised by the speed and ease of acquiring one.
For commercial mortgages, most traditional lenders will require an impeccable credit score and perfect financial history. Most businesses aren’t able to meet these stringent demands, which in the past meant they simply weren’t able to pursue real estate opportunities. But if you want to move to a new location or expand with multiple sites, then alternative lenders may be a good option. They offer sizeable loan amounts, long repayment lengths, and low interest rates too. So, if you don’t have a perfect financial history, there are still great funding sources available with highly competitive rates and terms.
How We Can Help
Strategic Capital offers numerous business loan options that support organizations across the USA. Transparency, innovation, and expertise are the driving factors behind everything we do.
With a talented team of advisors, a plethora of funding partners, and the best technology available -we go above and beyond to help our clients receive their capital rapidly with the industry’s most competitive repayment options and interest rates. We want to break speed records, not bank accounts.
Upon submitting your application, it’s reviewed by a dedicated Capital Advisor. We generate the best rates and terms at lightning speed through our funding matrix and robust lender network. Yep… it’s that simple. Learn more about our small business loans here.
Checking for pre-approval will not affect your credit score.