Best Business Loans

Best Business Loans for Small Business Owners in 2022

Have you been considering taking out a loan for your business?

It can be hard to find the right loan options, especially when you have so many other things to worry about. That’s why we’ve put together this guide on the best business loans, and how they can help you take your business to the next level.

There are two main types of loans, secured as well as unsecured. Secured loans actually require collateral but have lower interest rates. Unsecured loans actually don’t require any collateral, but they do have higher interest rates.

No matter which kind of business loan is right for you, one thing is certain: having the money to back up your dreams is always key.

What are your options?

Some of the options available to business owners are bank loans, SBA loans, term loans, business lines of credit, and equipment financing. To qualify for financing, you generally need a year or more of business history and revenue. Startups that have been in operation for less than a year should consider other financing options.

The best loan for your small business will be determined by a number of factors, including:

• Purpose of funding
• How soon you need the capital.
• The amount of capital you need
• Your company’s credentials
• Total debt cost

Securing a traditional business loan can be difficult unless you have excellent credit standing and a thriving business that has been in operation for some time. This is where alternative lenders can help. They are willing to work with borrowers who are often turned down for business financing by traditional banks. Alternative lenders provide a variety of financing options, including working capital loans, equipment financing, merchant cash advances, invoice factoring, and finally term loans. Other lenders also make it simple to obtain financing, with online applications and same-day funding. We looked into a variety of options to help you find the best lender for you. The ones listed below are the ones we believe are the best for various types of loans and businesses.

Different business owners have different reasons for taking out a business loan; let us look at the most common ones:

• For business expansion
• In order to expand the business location
• To launch a new business
• Accumulating credit for future needs
• Purchasing business equipment
• For purchase of additional inventory
• To attract more employees

To be able to pursue the above goals, there are various options available to the business owner. It’s important to choose one that best suits your company’s needs.

Types of Business Loans

Depending on your needs, there are various types of business loans. Among the most important are:

Term Loans

Borrowers who choose term loans have two options: secured and unsecured loans:

• Secured loans are those obtained in exchange for a personal guarantee or a valuable asset, such as a mortgage.
• Unsecured loans- Because they are short-term loans ranging from 5 to 15 days, businessmen prefer unsecured loans because no collateral is required.

Overdraft Facility

In this type of loan, business owners have an agreement with a bank allowing them to obtain a larger sum of money than what is currently in their account as a loan to meet their business needs. The amount you can withdraw, the interest rate, and the duration are all subject to mutual agreement between the bank and the borrower.

Demand Loans

If a business owner obtains a demand loan for financial purposes, he must repay the amount whenever the bank or non-banking financial company (NBFC) requests it. They can be obtained either as secured and unsecured loans. Demand Loans are best for meeting short-term financial needs because they have a maximum term of 12 months; the merchant can also have it reviewed if the bank agrees.

Letter of Credit Facility

You can apply for this financing scheme based on the creditworthiness of the bank; this occurs when the buyer and seller do not know each other, such as in international trade transactions.

Loan Against Securities

As the name implies, you can obtain a loan against financial securities authorized by the bank, such as mutual funds, real estate, gold, insurance policies, maturity plans, savings bonds, and so on

Cash Credit Facility

This is an overdraft loan that business owners can obtain to finance their working capital needs by pledging current assets such as inventory, receivables, and so on as collateral. The amount you would receive is determined by the bank’s stock margins, and the tenure period is 12 months.

Business loans for women entrepreneurs

Many banks and NBFCs offer unique loan programs for existing and prospective female entrepreneurs to support women’s empowerment. These existing schemes provide women with numerous benefits and discounts on interest rates, security, and time. However, these loans are only available to females who own more than 50% of the company’s stock.

Bank guarantee

You can obtain this pre-approved secured loan by pledging residential, commercial, or industrial property as collateral, regardless of whether you own a public/private limited company or a sole proprietorship/partnership firm. Companies can use this loan to pay down debts, purchase equipment, and cover any other expenses that will help their business thrive.

In a bank guarantee, the merchant promises to pay the guaranteed company’s stakeholders if it fails.

What to Consider Before Applying for that Loan

It is critical that you understand the following features before applying for a business loan:

• The approval of the business loan is based on a number of factors, including the amount of revenue generated each year, an estimate of the business, and the number of years it has been in operation.
• If you need a business loan, you must carefully consider all of your options before deciding on one.
• Banks and financial institutions that provide business loans provide their customers with the option of receiving doorstep service. Furthermore, many of the top business loan providers in India do not require a deposit, guarantor, or collateral from the applicant.
• Unsecured business loans allow businesses to finance their specific needs while repaying their loan in simple monthly installments. You can use these loans for a variety of purposes, including but not limited to business expansion, working capital, and so on.
• Business loans come with a plethora of benefits, such as SMS, Web Chat, Phone Banking, and so on, which you should always double-check before applying for the loan. Furthermore, many banks have extended to exceptionally higher loan amounts to their self-employed customer base.
• Nowadays, many banks offer their customers the option of obtaining business loan eligibility in a matter of minutes. They can apply for the loan online or at any of their local branches. Quick approvals ensure that customers do not waste time waiting for banks to respond to their loan requests.

Best Business Lenders for 2022

When it comes to business loans, finding the right lender can be difficult. You want someone who understands what you do and will support your goals. Someone who doesn’t just talk about making money, but actually helps businesses reach their financial goals. Here we have rounded up seven of the best business loan providers who can work with you as you reach your business goals. We chose these companies based on the ease of application, minimum requirements, minimum credit score, fast release of funding, and maximum loan or line of credit amount. These are the seven lenders with the best terms for small business owners looking for a simple business loan.

Fundbox

Fundbox is an online financial platform that provides small-business loans to entrepreneurs who need fast access to working capital. Business owners can choose between term loans and lines of credit. Fundbox is known for its flexible requirements and simple application process. Funding can be as fast as one business day. It is perfect for businesses with a low credit score.

Kabbage

Kabbage is a fintech and data company that has automated the application process for businesses who wish to apply for a business loan. It offers a variety of secured and unsecured small business loans and credit line options. Businesses with lower annual revenue can easily get approved with Kabbage with its simple online application procedure.

OnDeck

OnDeck is America’s largest online small business lender. It offers flexible funding for small businesses, the service of its committed loan advisors, and a hassle-free application process. Funding can be released on the same day once approved. OnDeck has delivered more than $13 billion loans since it was founded.

Lendio

Lendio is a marketplace that offers various loan types from more than 75 lenders. You can compare loan offers and choose from so many available options. This lets you get the best rate and terms that your business qualifies for. Funding can be available in as short as 24 hours

BlueVine

BlueVine is another lending platform where businesses can avail of short-term business lines of credit. Borrowers can choose credit lines that have six- and 12-month repayment periods. It is ideal for business owners who need quick access to working capital. It offers the best line of credit and is ideal for applicants that are at least six months in business, with at least $120,000 in revenue, and need quick access to capital.

Funding Circle

Funding Circle is a global lending platform that connects business owners with investors who want to invest in small businesses. Loans are typically between £10,000 and £400,000 for a period of up to five years. The majority of the loans are unsecured. Borrowers are satisfied with Funding Circle’s simple application process, efficient customer service, and quick funding times.

Biz2Credit

Biz2Credit is an online credit resource that helps entrepreneurs and small businesses to get access to capital with a fast approval process. It connects businesses to lenders who can provide a wide variety of funding options. Application takes just 4 minutes to complete, and funding can be released in as fast as 72 hours.

FAQs

What is the first step when applying for a business loan?

The first step is to identify the purpose of your business loan – is it for business expansion, purchase of inventory or equipment, working capital, etc. Identifying your business financing needs will help you determine the amount you need and the type of loan you should apply for. Make sure you understand what type of loan you need and how much you can afford.

What is the best business loan that I should consider applying for?

There is not one business loan that is ideal for all businesses. Different small businesses have different needs. The best business loan is the one that suits your company’s needs best.

What’s the most important factor to consider when getting a business loan?

Loans come with interest, and different lenders have different interest rates. Therefore, you must perform due diligence and research on the rates of several lenders before choosing one with the lowest interest rate. Lower rates will keep your repayments within acceptable limits. You should also be wary of hidden charges like processing fees, appraisal fees, etc.

Is it important to check out a lender’s customer support?

If you have problems with repayment, a great customer support service can be your lifesaver. Make sure you’re a good fit with your lender by researching their customer support ahead of time. Reading reviews from past clients will also give you an idea about their customer support services.

How long will it take to pay a business loan?

Different lenders and loan types have different loan terms. Some loans should be repaid in 6 – 12 months; some can take five years to repay.

Will asking for a bigger loan amount affect my chances of getting approved?

No. The principal amount does not in any way have an impact on your chances of getting approved. Lending institutions are generally willing to provide large financing requests as it is more profitable to them in the long run. Don’t be afraid to ask for a large amount as long as it is truly what you need. Make sure you consider the amount you really need to grow your business and how much you are able to repay monthly.