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Articles related to small business loans

Tag Archive for: business loans

Complete Guide to Restaurant Loans

Industry Challenges
by Vince Calio10 minutes / September 30, 2024
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business loans for restaurants

Owning a restaurant can be rewarding, but often comes with financial challenges. Restaurants may experience irregular or seasonal revenue, while they must continue to make payroll, maintain equipment, and stock pantries, coolers, and bars.

Whether you’re launching a new restaurant concept, expanding an existing restaurant, or just need working capital to keep the bills paid when revenue fluctuates, a restaurant loan could be the answer. Restaurant loans can help restaurants grow and maintain operations without straining their finances.

What are Restaurant Business Loans?

A restaurant loan is a small business loan used by restaurant owners. The business loan provides financing that a restaurant business owner can use to support their restaurant operations. There are a variety of different ways that a restaurant loan can be structured, such as varying loan amounts and terms, depending on the needs of the restaurant and its owners.

 How do Restaurant Business Loans Work?

Restaurant business loans work just like any other business loan – where the lender gives the restaurant owner a lump sum of money and the borrower will repay the loan with interest in agreed-upon monthly payments. These payments are fixed, making them easy to account for on a regular basis.

There are other types of financing that a restaurant owner could choose depending on their needs. For example, if the restaurant needs a dining room renovation, a lump-sum loan may be the right choice to purchase the equipment. But if the restaurant just needs available working capital to tap into when revenue is slow, another option, such as a business line of credit, may be the best option.

 Restaurant Loan Benefits

A restaurant loan can offer a number of benefits for owners, including:

Cash flow flexibility

Most restaurants face unexpected expenses from time to time. Food prices may spike temporarily, or an oven or dishwasher may need a major repair or replacement. Rather than worrying about how you’ll have the cash flow flexibility to cover unexpected expenses, a restaurant loan can ease your mind and help you manage those costs.

Financing for growth

Business growth and expansion can become unmanageable if it occurs faster than you can finance it. Restaurant owners may use small business loans to help finance the growth of their business by purchasing new equipment, hiring and training more staff, buying additional inventory, leasing more space, or ramping up marketing. Loan financing may also pay for renovations to an existing space or equipment upgrades if needed to plan for future business growth.

Meet seasonal needs

In many cases, restaurants are seasonal businesses where the amount of revenue coming in fluctuates throughout the year. Restaurant owners may need extra funding to prepare for the upcoming season or to keep the bills paid during the slower seasons.

A restaurant loan could help with hiring and training seasonal staff, purchasing inventory, and creating seasonal advertising to prepare for the busiest time of the year. This funding may also help business owners during a slow season by covering costs to meet immediate needs.

Restaurant Loan Drawbacks

A restaurant loan can help you run your business smoothly, but it may also have drawbacks, such as:

Potential collateral requirements

Some restaurant loans require business owners to provide collateral to qualify for financing. That may mean securing the loan with funds in the business account, the restaurant’s building or food truck, or even the owner’s personal house, car, or retirement funds.

Consistent payments despite inconsistent revenue

Even though a restaurant’s revenue may be seasonal or inconsistent, payments on a restaurant loan must be made consistently. It’s important to plan how the payments will be made before taking out a loan.

 Restaurant Loan Uses

A restaurant loan can be used for almost any expense a restaurant has, such as:

  • Restaurant growth – A restaurant loan could fund one or more new locations or the expansion of a current restaurant location.
  • Equipment purchases or repairs – Every restaurant needs equipment, but purchasing, maintaining, and repairing that equipment can be expensive. A restaurant loan can help cover the costs.
  • Payroll and other regular expenses – A restaurant loan can make it possible to meet payroll obligations and cover other monthly bills when cash flow is tight.
  • Food inventory – Stocking the restaurant pantry and freezer can be expensive. A restaurant loan can finance food costs so that your restaurant is ready to serve a crowd of customers.

Note that some business lenders will set stipulations for what the loan funds can be used for. Make sure that your planned purchases are approved before you accept a loan offer.

 Types of Business Loans for Restaurants

There are a variety of different types of loans available for restaurant owners. The one that works best for you will depend on your specific needs.

 Term Loan

With a small business term loan, a restaurant receives funding upfront and pays it back in installments — plus interest — over time. The loan must be paid back with regular payments within an agreed-upon term, such as one year, five years, or 10 years. Lenders may consider business and personal financial history and credit score for qualification

SBA Loan

An SBA loan is a flexible financing solution for a restaurant. Because a portion of an SBA loan is guaranteed by the U.S. Small Business Administration, lenders can typically provide these loans to borrowers with more favorable terms and interest rates than conventional loans. That may mean restaurant owners can take advantage of greater accessibility, lower down payments, and longer repayment terms than other financing options. However, SBA loans are difficult to qualify for and are not a viable option for every restaurant owner.

Restaurant Financing Alternatives

When a traditional loan isn’t the right fit for your restaurant, there are alternative types of financing that might work, including the following.

 Line of Credit

A business line of credit for a restaurant allows access to a predetermined amount of funds whenever you need it, allowing you to only pay interest on the amount drawn from the total. The funds become available to borrow again as you pay down balances.

 Business Credit Card

A business credit card works like a personal credit card, allowing a business owner to charge purchases up to a certain limit. Carrying your statement balance beyond the payment due date can incur interest charges. When the card has a balance, the business owner must make a monthly payment that includes both principal and interest owed.

Grants

Business grants are funds that are granted to a small business free of charge, with no need for repayment. Many different organizations offer small business grants, including government agencies, nonprofit organizations, and some large corporations. Typically, small businesses must complete an application and go through a competitive process to win a grant.

Equipment Financing

Equipment financing allows small business owners to purchase the equipment they need to keep their businesses moving ahead, without tapping into savings or working capital. Restaurants may be able to get a tax deduction when they use equipment financing, too, though you should connect with an accountant before filing your business taxes.

 Invoice Factoring

If your restaurant provides catering or other services that involve invoicing customers, you could consider invoice factoring, which is a way of accessing capital by selling invoices to a third party. In return, the restaurant business would receive an advance based on a percentage of the total value of the invoices. In some cased, the third party factoring company may then assumes responsibility for collecting payments from the customers who owe the outstanding balances.

 Crowdfunding

Many small businesses have accessed funding through crowdfunding on platforms like Kickstarter and gofundme. If your restaurant business has a unique or touching story that might attract the interest and support of a wide variety of individuals, crowdfunding may be a good option.

How to Get a Restaurant Loan

The specifics may vary based on the type of loan you want, but most restaurant loans require the following when applying:

  • Personal and business credit scores
  • Revenue of the business
  • Length of time in business
  • Size of the business
  • Collateral (if required)
  • Business Checking Account
  • Previous year’s tax returns and/or bank statements

From there, you should compare multiple lenders and restaurant loan options to find the best fit for your business.

 Where to Get a Restaurant Loan

Restaurant loans are usually offered by traditional banks, credit unions, and online lenders, each of which comes with benefits and drawbacks.

A traditional bank loan may come with lower rates, making it the most affordable option. However, banks often set strict eligibility requirements, and loan applications can take a while to process. Once approved, loan funds could take longer to disperse than other options.

Credit unions are excellent local resources for small businesses. They offer competitive rates and a more personalized service than many banks, though loan limits are typically lower than with banks. Credit unions can also have lengthy approval processes.

Online lenders provide a quick alternative to banks and credit unions. Application approval and fund dispersal can take a matter of days for some online lenders. Online lenders also offer flexible loan options, letting you find a restaurant loan that fits your business. However, many online lenders come with higher rates than banks or credit unions.

How to Choose a Restaurant Loan

To select the best restaurant loan for your situation, look for a lender that has experience working with restaurants. It’s also a good idea to compare lenders and rates and consider a variety of different products before choosing the one that works best for you.

When shopping around with different lenders, compare terms such as:

  • How much you’ll be able to borrow
  • How long you’ll have to repay a loan
  • The interest rate and fees
  • Collateral requirements
  • Personal guarantee requirements

 


Restaurant Loan FAQs

 Is it hard to get a restaurant loan?

Most restaurant owners have a wide variety of business loans that are now available to them, especially through online lenders. Eligibility for a loan comes down to personal and business credit scores, the business’s financial health, and collateral if needed.

Do banks lend to restaurants?

Some banks make loans to restaurants, depending on the restaurant’s length of time in business, performance record, and financials. Restaurants that are not able to get a loan from a bank have plenty of other options for raising capital with online lenders and nontraditional finance companies.

 How big of a loan can you get for a restaurant?

The size of a restaurant loan will depend on the lender and the qualifications of the borrower. Some new restaurant owners might qualify for a loan of $50,000, while more experienced restaurant owners might qualify for a loan that is much larger. Check with lenders to see what your restaurant business qualifies for.

Vince Calio

Vince Calio

Content Writer
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Vince Calio has been a writer for Kapitus since 2021. Before that, he spent three years operating a dry-cleaning store in Rahway, NJ that he inherited before selling the business, so he’s familiar with the challenges of operating a small business. Prior to that, Vince spent 14 years as both a financial journalist and content writer, most notably with Institutional Investor News and Crain Communications.

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Financing Options for Nonprofits

Manage Your Money
by Vince Calio9 minutes / September 27, 2024
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business loans for nonprofits

As a nonprofit owner, you likely understand that running an organization dedicated to a cause can be incredibly rewarding. However, one of the most significant challenges you may face is finding the necessary financing to sustain and grow your mission.

The financing process might seem complicated and fraught with obstacles, but rest assured, there may be more options available to you than you might realize. So, whether you’re just starting or looking to expand your nonprofit, understanding the various financing options available to you can make a substantial difference in your journey.

Is Nonprofit Financing Hard to Get?

The short answer is yes — securing financing for a nonprofit can be challenging. There are several reasons nonprofits might have a harder time obtaining funding than for-profit businesses.

One major hurdle is collateral. Nonprofits often lack substantial assets that can be used as collateral for traditional loans, making lenders hesitant to approve their applications. Nonprofits may also struggle to meet minimum revenue requirements set by lenders, as their income could be unpredictable and heavily reliant on donations and grants.

Despite these challenges, many financing avenues are available, tailored to meet the unique needs of nonprofit organizations.

Financing Options for Nonprofits

There are several financing options available for nonprofits, each with a set of benefits, drawbacks, and varying requirements.

Business Loans

Business loans can be a viable option for nonprofits seeking funding. These loans are similar to those offered to for-profit businesses, providing a lump sum that must be repaid with interest over a specified period.

Business loans could be used for various purposes, such as expanding your nonprofit’s operations, purchasing equipment, or covering operational expenses. One advantage of business loans is their flexibility in terms and loan amounts and relatively straightforward application process.

However, nonprofits may face challenges when applying for business loans. Lenders typically require a solid credit history, a detailed business plan, and collateral to secure the loan (though some lenders may offer unsecured business loans). Nonprofits often need help to meet these criteria, especially newer organizations without an established financial track record.

SBA Loans and Grants

The Small Business Administration (SBA) offers various loan and grant programs that can benefit nonprofits. SBA loans, such as the 7(a) loan program, provide financial assistance for multiple purposes, including working capital, equipment purchases, and real estate acquisition. These loans often come with favorable terms and lower interest rates, making them an attractive option for nonprofits. However, they can be incredibly difficult to qualify for.

In addition to loans, the SBA also provides grants specifically for nonprofits. These grants can be used to fund specific projects, programs, or initiatives aligned with the organization’s mission. While grants do not require repayment, the application process may be competitive and time-consuming. Nonprofits must demonstrate a clear and compelling need for the funds and present a detailed plan for using the grant.

Tips When Applying for Nonprofit Business Loans

When applying for a business loan as a nonprofit, it’s essential to be well-prepared and organized. Here are some tips to help you through the process:

  • Determine your financing needs: Clearly define how much funding your nonprofit requires and what it will be used for. This helps you present a strong case to lenders.
  • Try building business credit: Establish and maintain good credit for your nonprofit. This can improve your chances of qualifying for loans and securing better terms.
  • Prepare a detailed business plan: A comprehensive business plan that outlines your nonprofit’s mission, goals, and financial projections is crucial. Lenders often want to see that you have a clear strategy for using the funds.
  • Gather financial documents: Be ready to provide financial statements, tax returns, and other relevant documents demonstrating your nonprofit’s financial health and stability.
  • Research lenders: Look for lenders specializing in nonprofit financing or with experience working with organizations like yours. They may offer more favorable terms and conditions.
  • Highlight your impact: Emphasize your nonprofit’s positive impact on the community and the broader society. Lenders may be more likely to support organizations that make a difference.

Alternative Nonprofit Financing Options

In addition to traditional loans and grants, several alternative financing options could be available to your nonprofit. These options may provide more flexibility and cater to the unique needs of nonprofit organizations.

Business Credit Cards

Business credit cards can be a useful financing tool for nonprofits, offering a revolving line of credit that can be used for various expenses. They could help manage cash flow and cover short-term costs.

However, using credit cards responsibly is essential to avoid accumulating high-interest debt.

Pros:

  • Easy access to funds for day-to-day expenses
  • Can help build business credit

Cons:

  • High interest rates, if not paid off in full each month
  • Limited credit limits compared to other financing options

Revenue-based financing

Revenue-based financing could allow nonprofits to receive funding in exchange for a percentage of future revenue. This type of financing can be attractive because repayments are tied to the organization’s income, which may make it more manageable during slow periods.

Pros:

  • Repayment is tied to revenue
  • Reduced pressure during slow periods

Cons:

  • Can be more expensive in than traditional types of financing
  • Suitable for organizations with steady revenue

Business line of credit

A business line of credit provides access to a predetermined amount of funds to be drawn upon as needed. This flexible financing option may help you manage cash flow and cover unexpected expenses. Repayments are only required on the amount drawn, making it a more cost-effective solution.

Pros:

  • Flexible access to funds
  • Interest is only paid on the amount used

Cons:

  • Requires good credit to secure more favorable terms
  • May come with fees and higher interest rates than traditional loans

Crowdfunding

Crowdfunding has become popular for nonprofits to raise funds for specific projects or campaigns. By leveraging online platforms, nonprofits could reach a broader audience and solicit donations from individuals who support their cause.

Crowdfunding can be an effective way to generate funds quickly, but it requires a well-planned campaign and active promotion, which may be difficult if you’re strapped for time or don’t have the staff to be as active as necessary.

Pros:

  • Can reach a large audience
  • No need to repay funds

Cons:

  • Requires significant effort to promote the campaign
  • Success is not guaranteed

Nonprofit Grants

Grants specifically designed for nonprofits may provide essential funding without the need for repayment. Grants are often awarded by government agencies, foundations, and corporations. While the application process can be competitive, securing a grant could significantly boost your nonprofit’s financial health.

Pros:

  • No need to repay funds
  • Can provide significant financial support

Cons:

  • Highly competitive and time-consuming to apply for
  • Funds may be restricted to specific uses

Fundraising Events

Organizing fundraising events can be an effective way to generate funds for your nonprofit while engaging with your community and raising awareness for your cause. Events such as charity runs, galas, and auctions can attract donations and sponsorships.

Pros:

  • Engages the community and raises awareness
  • Can generate significant funds

Cons:

  • Requires extensive planning and resources
  • Success depends on event turnout and engagement

Corporate Giving Programs

Some corporations offer giving programs that provide financial support to nonprofits. These partnerships can be mutually beneficial, as corporations seek to enhance their social responsibility efforts while nonprofits receive the necessary funds to further their missions.

Pros:

  • Provides steady funding and resources
  • Can enhance your nonprofit’s visibility and credibility

Cons:

  • May require aligning with corporate goals and values
  • Competitive to secure partnerships

Earned Income Ventures

Nonprofits can generate revenue through earned income ventures, such as selling products or services related to their mission. This approach may allow organizations to diversify their income streams and become more financially sustainable.

Pros:

  • Creates a sustainable revenue stream
  • Reduces reliance on loans, donations, and grants

Cons:

  • Requires significant planning and resources to establish
  • May divert focus from your nonprofit’s core mission

Impact Investing

Impact investing involves securing funds from investors seeking financial returns and social impact. Nonprofits can attract these investors by demonstrating how their work contributes to positive social or environmental outcomes.

Pros:

  • Aligns with your nonprofit’s mission and values
  • Can attract socially conscious investors

Cons:

  • Requires demonstrating both financial returns and social impact
  • May involve complex investment structures

Where to Get Nonprofit Business Loans

Nonprofits can explore various institutions and platforms to secure financing, such as:

Banks

Traditional banks are a common source of business loans for nonprofits. However, securing a loan from a bank can be challenging due to stringent requirements, such as high credit scores and substantial collateral. Nonprofits with strong financial histories and collateral may find success with bank loans.

Credit Unions

Credit unions often offer more personalized service and flexible terms than traditional banks. They may be more willing to work with nonprofits, especially those with strong community ties. However, not all credit unions provide business loans, so do your research and find one that does.

Online Lenders

Online lenders can be convenient for nonprofits seeking quick and accessible financing. These lenders typically have a streamlined application process and may offer more lenient requirements. It’s important to carefully review the terms and interest rates, as they can vary widely from lender to lender.

Community Development Financial Institutions (CDFI)

CDFIs are specialized financial institutions that provide credit and financial services to underserved communities, including nonprofits. They often offer favorable terms, and a better understanding of the unique challenges faced by nonprofits.

While securing financing for a nonprofit can be challenging, there are many options that could be available to help you achieve your goals. Stay informed, be prepared, and continue positively impacting your community!


Nonprofit Business Loan FAQs

How does a nonprofit get a loan?

Nonprofits can obtain loans by applying through various financial institutions, such as banks, credit unions, or online lenders. The application process typically involves providing financial documents, a detailed business plan, and demonstrating the nonprofit’s ability to repay the loan. Building a strong credit history and establishing relationships with lenders may also improve the chances of securing a loan.

Can a nonprofit have a line of credit?

Yes, nonprofits can obtain a line of credit, which provides access to a predetermined amount of funds that can be drawn upon as needed. A line of credit offers flexibility in managing cash flow and covering unexpected expenses.

Does SBA help nonprofits?

Yes, the SBA offers loan and grant programs that can benefit nonprofits. SBA loans, such as the 7(a) loan program, provide financial assistance for various purposes, including working capital and equipment purchases. The SBA offers grants specifically for nonprofits, which do not require repayment. These programs can significantly support nonprofits in achieving their missions.

Vince Calio

Vince Calio

Content Writer
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Vince Calio has been a writer for Kapitus since 2021. Before that, he spent three years operating a dry-cleaning store in Rahway, NJ that he inherited before selling the business, so he’s familiar with the challenges of operating a small business. Prior to that, Vince spent 14 years as both a financial journalist and content writer, most notably with Institutional Investor News and Crain Communications.

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What Is a Cash Flow Loan?

Manage Your Money
by Brandon Wyson12 minutes / September 27, 2024
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cash flow loan

Cash flow plays an important role in helping businesses maintain day-to-day operations, and cash flow loans can be an essential resource for businesses, especially those businesses that prefer to primarily qualify for financing based on their past and expected future revenue. Cash flow loans generally help businesses manage their operational costs, seize new opportunities, and bridge gaps in their cash flow.

What Is a Cash Flow Loan?

A cash flow loan is any loan meant to improve cash flow. Technically, there isn’t a specific “cash flow loan.” However, many cash flow loans refer to revenue-based financing, where the business owner doesn’t need collateral and qualifies primarily based on proof of past revenue and future revenue forecasts.

This means that if your business has a strong and consistent revenue stream, you might access this type of financing with lower credit scores and no collateral. However, each lender sets its own requirements, something to note when comparing cash flow loans.

What’s the difference between cash flow and asset-based lending?

Cash flow lending and asset-based lending differ mainly in the criteria used for qualification and the type of collateral required.

Cash flow lending focuses on the actual cash flow your business generates, using this as a basis to extend financing. Asset-based lending relies on assets like inventory, equipment, or real estate as collateral.

Essentially, if your business has sustainable and regular revenue but lacks substantial assets, cash flow financing could be the better option for your business.

How Cash Flow Loans Work

Lenders will look at your historical revenue and future revenue forecasts to determine your eligibility.

Repayments are made either through regular fixed payments or through a fixed percentage of your sales. Payments can be daily, weekly, or monthly, depending on the agreement. This structure may help you manage cash flow by aligning repayments with your revenue cycle.

For instance, revenue-based financing often involves lenders advancing funds that are repaid through a percentage of your future sales, allowing for flexible repayment aligned with your business’s cash inflows.

How to Use a Cash Flow Loan

Cash flow loans are versatile and can be used in various situations to support your business:

  • Cover a cash flow gap: Smooth over periods of low revenue.
  • Opportunities for revenue: Invest in new projects or ventures to increase income.
  • Purchasing inventory: Buy the necessary stock to keep your business running.
  • Fulfilling Purchase Orders: Ensure you have the resources to meet large orders.
  • Maintaining seasonal operations: Manage expenses during off-peak times.
  • Invest in Marketing: Fund marketing campaigns to drive sales.
  • Unexpected Costs: Handle emergencies or unplanned expenses.

Cash Flow Loan Example

Imagine a small retail business experiencing a surge in demand during the holiday season. The business decides to take out a cash flow loan to purchase additional inventory. They borrow $50,000 at an annual interest rate of 12%. Over 12 months, fixed monthly payments should be around $4,441.

Note that the interest rate and terms can vary widely based on your lender, the term selected, and the financial health of your business.

Types of Business Cash Flow Loans

Below are some of the forms of cash flow loans available, along with their unique features and benefits to help you make more informed business financing decisions.

Short-Term Loans

Short-term loans are typically repaid within 6-18 months and can provide quick access to funds for immediate cash flow needs. They are ideal for covering temporary gaps or seizing short-term opportunities.

Bridge Loans

Bridge loans are short term funding options used to bridge the gap between financing needs. For example, they can help businesses cover expenses while waiting for long-term funding to come through.

Business-2-Business (B2B) Lending

B2B lending involves loans between businesses. It can be a good option for companies that have established relationships with their suppliers or other businesses. One company sells its products or services to another business, and they handle payments, terms, and financial agreements.

Unsecured Business Loans

Unsecured business loans do not require collateral, making them accessible for businesses that lack substantial assets. Qualification is primarily based on the business’s revenue and creditworthiness.

Other Types of Cash Flow Financing

Each type of financing offers unique benefits and is suited to different business needs. Here’s an in-depth look at some of the most common forms of cash flow financing:

Invoice Factoring

Invoice factoring involves selling your outstanding invoices to a factoring company at a discount. This process allows you to quickly receive cash instead of waiting for your customers to pay. In some cases, the factoring company will even take on the burden of collecting the payments directly from your customers.

Benefits:

  • Quick cash flow improvement
  • No need for collateral
  • The factoring company may handle collections

Drawbacks:

  • Higher cost due to factoring fees
  • Potential impact on customer relationships, as they may interact with the factoring company

Revenue-Based Financing

Revenue-based financing involves receiving capital in exchange for a percentage of your business’s future revenue. Depending on the type of business you run, revenue-based financing payments can mimic traditional business loan agreements with fixed repayments on a specific schedule, OR they can be based on a fixed percentage of your daily sales receipts, allowing them to fluctuate with your business’s income.

Benefits:

  • Payments align with your sales, reducing pressure during low-revenue periods
  • No collateral required
  • Suitable for businesses with fluctuating revenues

Drawbacks:

  • Potentially higher overall repayment due to revenue percentage
  • Can be relatively expensive if business revenue is consistently high

Business Line of Credit

A business line of credit provides access to a revolving credit limit, similar to a credit card. You can draw funds as needed up to the limit and only pay interest on the amount drawn.

Benefits:

  • Flexible access to funds
  • Pay interest only on the amount used
  • Can be used for various business needs

Drawbacks:

  • Variable interest rates can lead to higher costs
  • Potential fees for maintaining the credit line

Cash Flow Loan Benefits and Drawbacks

Cash flow loans offer numerous benefits to businesses looking to maintain smooth operations and capitalize on opportunities without significant financial strain. However, they also come with some drawbacks that businesses need to consider.

Cash Flow Loan Benefits

  • Personal credit may be less important: These loans focus on revenue and business credit rather than personal credit scores, making them more accessible to business owners with less-than-perfect credit histories.
  • No collateral required: Businesses don’t need to risk assets or personal property to secure the loan.
  • Quick access to funds: The application and approval process is often faster than traditional loans, providing rapid access to capital.
  • Flexible use of funds: Funds can be used for various purposes, such as covering operational costs, purchasing inventory, investing in marketing, and handling unexpected expenses.
  • Helps manage seasonal fluctuations: Loans used for cash flow may provide necessary funds during off-peak periods, ensuring continuous operation.
  • Supports growth and expansion: These loans may help finance growth initiatives, such as launching new products or expanding facilities.

Cash Flow Loan Drawbacks

  • Higher interest rates: These loans often come with higher interest rates than other types of financing due to the increased risk to the lender.
  • Lower loan amounts: Cash flow loans may offer lower loan amounts compared to traditional secured loans.
  • Stringent eligibility requirements: Proof of consistent revenue is required, making it difficult for newer businesses with fluctuating revenue to qualify.
  • Potential for debt accumulation: Over-reliance on these loans can lead to debt, affecting financial health.

What Businesses Should Use a Cash Flow Loan

Cash flow loans can benefit various types of businesses, particularly those with consistent revenue streams.

Can a startup get a cash flow loan?

Yes, startups can qualify for cash flow loans, but it is rare and there are very specific conditions that must be met. Since startups typically have limited credit history and collateral, lenders focus on the business’s revenue streams.

Startups with strong, consistent revenue and solid future revenue forecasts often stand a better chance of securing a cash flow loan. These loans can help startups cover initial operational costs, invest in marketing, or expand their product lines.

However, the terms might be more stringent compared to established businesses, and interest rates could be higher to offset the lender’s risk. Also, many business lenders will still require startups to be in business for at least one year before becoming eligible for financing.

Can you get a cash flow loan with bad credit?

Possibly. Lenders look at your business’s ability to generate consistent income, which serves as a repayment guarantee. If you can demonstrate strong past revenue and promising future revenue forecasts, you might qualify for a cash flow loan despite a poor credit history.

This can be significant for businesses needing funds for operational expenses, inventory purchases, or unexpected costs, allowing them to stabilize and improve their financial health without the burden of credit requirements.

How do I Qualify for a Cash Flow Business Loan?

Qualifying for a cash flow business loan involves meeting specific criteria that demonstrate your business’s ability to generate consistent income. Lenders look for indicators of financial health and stability to ensure that the business can comfortably repay the loan.

Determining your business’s cash flow loan eligibility is the first step to getting a cash flow loan.

How to Get a Cash Flow Loan

  1. Meet eligibility requirements, including:
    • Minimum revenue: Lenders require proof of consistent revenue, typically through financial statements, bank statements, or tax records.
    • Time in business: Some lenders prefer businesses operational for at least a year to 18 month as this demonstrates stability and resilience. However, it is important to note that many lenders require a minimum of two years of operational history.  Before applying, it’s important to ensure you meet that lender’s time in business requirements.
    • Personal credit score: While revenue is the primary focus, if you’re a small business owner you may be asked for your personal credit score. Good credit scores may improve your loan terms and interest rates.
  1. Compare financing options and select the best fit
    • Identify your needs: Determine the specific purpose of the loan, such as covering operational costs, purchasing inventory, or investing in marketing.
    • Research loan types: Look into different cash flow financing options, including short-term loans, bridge loans, B2B lending, and unsecured business loans. Each type has its advantages and may suit different business needs.
    • Consider repayment terms: Evaluate the repayment terms and schedules to ensure they align with your cash flow patterns. Fixed repayments might be preferable for predictable cash flows, while revenue-based repayments could suit seasonal businesses.
  1. Compare lenders
    • Interest rates and fees: Different lenders offer varying interest rates and fee structures. Compare these to find the most cost-effective option for your business.
    • Reputation and reviews: Research lenders’ reputations by reading reviews and testimonials from other businesses. Reliable lenders with positive feedback are more likely to provide a smooth borrowing experience.
    • Customer service: Consider the quality of customer service provided by the lender. Good customer service can be crucial if you encounter issues or have questions during the loan term.
  1. Gather information/preparing your application
    • Financial statements: Prepare up-to-date financial statements, including profit and loss statements, balance sheets, and cash flow statements. These documents help demonstrate your business’s financial health.
    • Revenue documentation: Collect documentation that proves your business’s revenue, such as bank statements, sales records, and tax returns. Lenders may use this information to assess your eligibility and loan amount.
    • Business plan: Having a well-prepared business plan could be beneficial. It should outline your business goals, strategies, and how you plan to use the loan.
  1. Research cash flow loan options
    • Online lenders: Explore online lending platforms, which often provide quick approvals and flexible terms. These lenders can be more accessible and faster than traditional banks.
    • Traditional banks: While they might have stricter requirements, traditional banks may offer competitive interest rates and personalized service.
    • Alternative financing: Look into alternative financing options, such as revenue-based financing and invoice factoring, which may be more suitable depending on your business model and needs.

Alternative Options to Cash Flow Loans

If cash flow loans aren’t the right fit, several alternative financing options might suit your needs better.

  • Business credit cards: Business credit cards offer flexible access to funds for short-term needs and can earn you rewards. However, they come with high interest rates if balances aren’t paid off in full and often have lower credit limits than other types of financing.
  • SBA loans: SBA loans generally provide lower interest rates and longer repayment terms, suitable for various business needs, but they can be more difficult to qualify for.
  • Traditional term loans: Traditional term loans offer lump sums with fixed rates and predictable payments, ideal for large expenses. However, if you have a weaker credit score, this route may not be the best option.
  • Equipment financing: Equipment financing helps you purchase or lease equipment, often using the equipment as collateral. It can be easier to qualify for but can have higher interest rates and is limited to equipment purchases.

Final Thoughts: Cash Flow Loans

Cash flow loans can be an excellent tool for businesses needing to manage their cash flow and take advantage of opportunities. However, it’s essential to understand the terms and conditions to ensure it’s the right fit for your business.


Cash Flow Loan FAQs

Are cash flow loans secured?

Cash flow loans are typically unsecured, meaning they do not require collateral. However, some types of cash flow loans may require collateral, so check with the lender before applying.

Is it hard to get a cash flow loan?

The level of difficulty of obtaining a cash flow loan depends on the business’s revenue and overall financial health. Businesses must also meet other requirements such as minimum time in business and minimum business and personal credit scores.

What are the interest rates on cash flow loans?

Interest rates on cash flow loans vary depending on the lender, business financials, and market conditions. It’s essential to shop around and compare rates from different lenders.

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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Secured Business Loans: What to Know

Manage Your Money
by Brandon Wyson8 minutes / June 25, 2024
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Secured business loans

When it comes to securing financing for your small business, secured business loans may offer a reliable option. These loans utilize collateral to provide lenders with security, which could make them more accessible for businesses with limited credit history or lower credit scores.

Let’s delve into the ins and outs of secured business loans, covering everything from how they work to the types of financing available and the qualification requirements you need to meet.

What is a Secured Business Loan?

A secured business loan is a type of financing in which you, as the borrower, pledge assets as collateral to secure the loan.

These assets could include property, equipment, inventory, or accounts receivable. By providing collateral, you reduce the lender’s risk, typically making it easier to qualify for the loan.

However, it’s important to understand that defaulting on the loan could result in the loss of the pledged assets.

Parts of a Secured Business Loan

Secured business loans consist of various components that impact the size of the loan, how much you pay, and expenses you’re allowed to use the business loan for. Understanding how these parts of a secured business loan work can help you decide whether this is the right type of financing for your small business.

Here are some of the most important components of a secured business loan:

  • Interest Rate: This refers to the percentage charged by the lender on the principal amount, which is the initial amount borrowed. The interest rate is essentially the cost of borrowing the money and can be fixed or variable, depending on the loan type and lender.
  • Loan Term: The loan term indicates the duration within which the borrowed amount must be repaid in full. It’s often expressed in months or years.
  • Collateral: Collateral is any asset that the borrower pledges as security for the loan. The lender will determine what types of collateral they accept, but many allow property or a home to be used as collateral. Without collateral, lenders rely more heavily on the borrower’s creditworthiness.
  • Repayment: Repayment involves returning the borrowed funds to the lender according to the agreed-upon terms, which usually include periodic installments comprising both principal and interest. If you get a fixed rate secured business loan, then monthly payments will remain consistent throughout the life of the loan.
  • Uses: Secured business loans can serve various purposes, including working capital needs, purchasing inventory, expanding operations, or investing in marketing initiatives. With most lenders, they offer flexibility in funding without the necessity of specifying the loan’s purpose. Make sure that the lender you choose lets you use the funds as planned as some lenders set restrictions on acceptable uses.

Secured vs Unsecured Business Loans

Comparing secured and unsecured business loans might help you determine the best option for your business needs. Here’s a breakdown of their differences:

As mentioned before, secured business loans use collateral to secure the loan, which can allow lenders to accept borrowers with lower credit scores. While specifics vary by lender, secured business loans:

  • Require collateral.
  • Typically have lower interest rates.
  • Come with longer terms than unsecured loans.
  • Allow for larger loan amounts than unsecured loans.
  • Are suitable for businesses with valuable assets.

Unlike secured business loans, unsecured business loans require no collateral, making them ideal for small businesses with few assets but strong credit. Unsecured business loans:

  • Do not require collateral.
  • Generally have higher interest rates than secured business loans.
  • Often come with shorter loan terms than secured business loans.
  • Require strong personal and business credit scores.
  • May require stricter business income levels for approval.
  • Are suitable for businesses without significant assets or those unwilling to pledge collateral.

Why Consider a Secured Business Loan?

Secured business loans are particularly beneficial for businesses that may not qualify for unsecured loans due to limited credit history or lower credit scores. They can offer advantages such as lower interest rates, higher borrowing limits, and longer repayment terms.

Secured business loans can also be an excellent way to build business credit, assuming the borrower makes payments on time and in full.

Before applying for a secured business loan, it is essential to weigh these benefits against the potential drawbacks, including the risk of losing collateral in case of default.

Benefits of Secured Business Loans

One key benefit of secured business loans is the lower interest rates compared to unsecured loans that typically comes with them. This means lower repayments than a similar loan with a higher rate, leaving more money left over for operations and growth.

Secured business loans also do not typically require strong credit histories and scores as the collateral makes the loan a safer option for lenders.

Secured loans often have higher borrowing limits than unsecured loans, allowing businesses to access larger amounts of capital. The longer repayment terms typically offered by secured loans may also give businesses greater flexibility in managing their cash flow.

Drawbacks of Secured Business Loans

Despite their advantages, secured business loans also have drawbacks. The most significant risk is the potential loss of collateral if the borrower defaults on the loan.

The application process for secured loans may be more time-consuming than for unsecured loans, and businesses with insufficient collateral could struggle to qualify for the financing they need. Keep in mind that collateral used for a secured business loan needs to get appraised, too, another step that adds time to the application process.

Types of Secured Business Loans

Secured business loans come in various forms, each tailored to meet different business needs. Here’s a brief overview of the types of financing available:

Term Loans

Term loans are a common form of business financing where a lump sum of money is borrowed and repaid over a set period, typically with fixed monthly payments and fixed interest rate.

These loans are generally ideal for long-term investments such as purchasing equipment, expanding operations, or funding significant projects. Terms loans offer predictability and stability, great for business owners that want consistency.

SBA Loans

SBA (Small Business Administration) loans are government-backed and designed to support small businesses. They provide favorable terms and lower interest rates than traditional loans, making them an attractive option for business owners who may not qualify for conventional financing.

SBA loans come in various forms, including 7(a) loans, CDC/504 loans, and microloans, each tailored to different business needs.

Secured Business Loan Alternatives

Line of Credit

Similar to a credit card, a line of credit allows you to borrow up to a predetermined limit as needed. You only pay interest on the amount you use, making it an ideal option for managing cash flow fluctuations, covering unexpected expenses, or seizing growth opportunities. The flexibility of a line of credit makes it a popular option for small business financing.

Lines of credit may be secured by collateral, such as inventory or equipment, depending on the lender.

Invoice Factoring

Invoice factoring involves selling your accounts receivable to a third-party company, known as a factor, at a discount. In return, you quickly receive cash, which could be crucial for businesses with slow-paying customers or seasonal fluctuations in cash flow. While it may be more expensive than traditional loans, invoice factoring could provide quick access to capital without taking on additional debt.

Equipment Financing

Equipment financing allows businesses to purchase or lease equipment without a substantial upfront investment. This type of financing uses the equipment itself as collateral, reducing the lender’s risk. Terms and interest rates may vary based on factors like equipment type and your creditworthiness. Whether you need machinery, vehicles, or technology, equipment financing could provide a cost-effective way to acquire essential assets while preserving your working capital.

Secured Business Loan Qualification Requirements

To qualify for a secured business loan, you’ll typically need to meet certain requirements, including:

  • Time in business
  • Collateral
  • Good business credit score
  • Good personal credit score
  • A history of business operations
  • Sufficient revenue to repay the loan

Keep in mind that lenders set their own requirements, and some may set stricter requirements than others. In some instances, you may be required to submit additional information, such as tax information or a business plan.



Secured Business Loan FAQs

How much collateral is needed for a secured business loan?

The amount of collateral required for a secured business loan could be different depending on factors such as the loan amount, the lender’s policies, and the type of collateral offered. Generally, lenders will determine the value of the collateral relative to the loan amount to determine adequacy.

Is a secured business loan hard to get?

Secured business loans may be easier to qualify for compared to unsecured loans since the collateral reduces the lender’s risk. However, meeting the qualification requirements, including providing sufficient collateral and demonstrating the ability to repay the loan, is essential.

How long does it take to get a secured business loan?

The time it takes to get a secured business loan may vary depending on factors such as the lender’s processing time, the application process, and the amount of required documentation. In general, the process may take several weeks to complete, from application to funding.

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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How to Get an Unsecured Business Loan

Manage Your Money
by Brandon Wyson9 minutes / June 23, 2024
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unsecured business loan

Unsecured business loans offer business owners the financing they need without requiring collateral. From purchasing inventory or equipment to hiring staff and acquiring a workspace, an unsecured business loan can facilitate growth and expansion for any small business. While unsecured business loans can be great for providing financing, many small businesses may benefit from an alternative option. In this guide, we’ll explore what unsecured business loans are, how they work, and how to get one.

What is an Unsecured Business Loan?

An unsecured business loan is a type of financing that doesn’t require collateral. While secured loans require borrowers to pledge assets such as real estate or equipment as security, unsecured loans are approved based on the creditworthiness of the borrower. For new business owners seeking their first loan, lenders typically evaluate the applicant’s personal credit score and business credit score. However, applicants with an established business and a strong business credit score could be evaluated on their business credit score alone. All other things being equal, a higher credit score generally improves the changes of getting approved for an unsecured business loan with better rates.

With unsecured business loans, borrowers face no threat to their assets. However, late payments or a default may hurt their credit score (personal or business, depending on which is applicable) and their ability to borrow in the future.

How Unsecured Business Loans Work

The disbursal and repayment process for any unsecured business loan depends on the type of loan you’ve applied for. In most cases, an unsecured business loan refers to a term loan. Term loans involve a lumpsum disbursal combined with fixed monthly payments for a predetermined repayment period. Loan amounts are generally lower for unsecured term loans compared to secured term loans, and terms can last as short as six months to years, depending on the lender you choose.

Parts of an Unsecured Business Loan

When evaluating an unsecured business loan, you should consider the different parts of the loan that impact the total length and cost. Parts of an unsecured business loan to review include:

Interest Rate: This is the percentage charged by the lender on the principal amount borrowed. Many unsecured business loans have a fixed rate, though keep in mind that a variable rate loan means the interest can change during the life of the loan.

Loan Term: The loan term, sometimes known as the repayment term, is the period over which the loan is to be repaid. Loan terms can be a short as months to as long as years. Longer terms often mean lower monthly payments but higher total interest payments.

Repayment Schedule: Repayment is the process of paying back the borrowed money to the lender. Repayment schedules could be daily, weekly, or monthly, depending on the lender.

Uses: Some lenders outline specific uses for the loan, such as equipment purchases or payroll financing. Make sure that the unsecured business loan can be used toward your specific needs.

Unsecured Business Loan Benefits

Unsecured business loans offer applicants some excellent benefits, including:

  • No collateral required: Applicants won’t have to put up any assets to secure the loan, which can be beneficial if you don’t have valuable assets to use as collateral or if you’re uncomfortable with the risk.
  • Quick access to funding: With no collateral required, the loan approval process is typically faster than with secured loans. Some applicants receive their funds within a day of being approved (though approval and disbursal timelines vary by lender).
  • Accessible financing option: One advantage of unsecured business loans is that most applicants can usually find a lender that meets their needs.
  • Versatility: Most small business loans can be used for anything from refinancing an existing loan to consolidating debt, expanding operations, buying more inventory, and covering operational expenses.

Unsecured Business Loan Drawbacks

Here are some drawbacks of unsecured business loans that business owners should be aware of:

  • Higher interest rates: Because unsecured loans are riskier for lenders, they often come with higher interest rates than secured loans. On the flip side, secured loans can offer borrowers access to lower interest rates.
  • Stricter eligibility requirements: To qualify for an unsecured business loan, you’ll need to have a strong credit history and a proven track record of revenue and profitability.
  • Less desirable terms: Lenders may be less willing to issue large loan amounts since unsecured loans are riskier. Borrowers may be approved for a smaller loan and a shorter repayment period.

Secured vs Unsecured Business Loans

Business owners must determine which business loan best fits their needs. While a secured loan can sound risky, it could lead to better terms and rates. On the other hand, an unsecured loan may be a better fit for borrowers with great business or personal credit.

Unsecured LoanSecured Loan
Collateral not requiredCollateral is essential
Potentially higher interest ratesCollateral allows for lower interest rates
Ideal for borrowers with good creditSuitable for all borrowers, including those with lower credit or a short credit history
Borrowing limits may be lower due to higher riskLess risk for the lender could mean a higher borrowing limit
Defaulting on the loan may mean long-term credit damage and having accounts sent to collections.Lenders will usually seize the collateral if the borrower defaults on the loan.

Who Offers Unsecured Business Loans?

Small businesses can get an unsecured business loan from a variety of sources, including banks, credit unions, and online lenders. Banks and credit unions usually offer the best rates and borrowing limits; however, the application and approval processes may be longer and more tedious. Online lenders can issue faster loans and may have fewer eligibility criteria but may have higher interest rates.

It’s a good idea for business owners to compare multiple different lenders before applying for a loan.

4 Steps to Get an Unsecured Business Loan

Getting an unsecured business loan doesn’t have to be complicated. Here’s a simple four-step process to help you secure business financing.

Check Your Business Credit Score

Before applying for a loan, it’s essential to know where you stand. Check your business credit score to see if you meet the lender’s minimum requirements. You can get a free copy of your business credit report through credit bureaus like Experian and Dun & Bradstreet. While specific credit score requirements vary from lender to lender, generally, a higher credit score will increase your chances of approval and may qualify you for better terms and lower interest rates.

Gather Required Documents

Most lenders will require documentation to verify your business’s financial health and creditworthiness. Commonly required documents include:

  • Business agreements, licenses and permits (if applicable)
  • Business tax returns
  • Profit and loss statements
  • Balance sheets
  • Bank statements

Research Options

Once you know your credit score and have gathered your financial documents, it’s time to research your lending options. Compare interest rates, loan terms, and repayment options from different lenders to find the best fit for your business. Don’t forget to look for any fees and charges associated with the loan.

Submit Your Application

Once you’ve chosen a lender and loan, the next step is to submit your loan application. Be prepared to provide detailed information about your business, including its financial history, revenue, and the purpose of the loan. Most lenders accept applications online, but the exact process and information requested may vary. Contact your lender if you’re unsure about your application. After you’ve submitted your application, the lender will review it and let you know if you’ve been approved for a loan.

Unsecured Business Loan Alternatives

While unsecured business loans can be a great option for many businesses, they’re not the only solution. Here are some alternative financing options to consider.

Lines of Credit

A business line of credit works similarly to a credit card, allowing you to borrow up to a predetermined limit as needed. You only pay interest on the amount you borrow, making it a flexible financing solution. However, unlike a business credit card, you won’t earn rewards and may have to contend with minimum withdrawal amounts or penalties for non-use.

Invoice Factoring

If your business invoices customers for goods or services, you may be able to use those invoices to secure financing. Invoice factoring offers you financing upfront for your unpaid invoices, providing you with immediate cash flow. Invoice factoring is ideal for business owners dealing with slow-paying customers. However, business owners typically receive less than the total value of their invoices.

SBA Loans

The U.S. Small Business Administration (SBA) offers several loan programs designed to help small businesses access the funding they need. SBA loans often give borrowers more flexible underwriting criteria than traditional loans. The SBA Guarantee helps protect lenders and reduces their risk, which may translate into more attractive terms and rates for borrowers.

Business Credit Card

Similar to a line of credit, a business credit card allows you to use money as you need up to the credit limit. One benefit of business credit cards is that many offer rewards and perks to business owners. Keep in mind that business credit cards come with higher APRs, so this can become an expensive financing option if you don’t pay off your statement on time and in full.

Unsecured Business Loan FAQs

Can SBA loans be unsecured?

An SBA (7)a loan does not require collateral if you’re borrowing under $50,000. For loans ranging from $50,001 to $500,000, collateral is a requirement.

How do you qualify for an unsecured business loan?

To qualify for an unsecured business loan, you’ll need to meet the lender’s approval criteria. Usually, this requires a strong credit history, a proven track record of revenue and profitability, and a solid business plan. Lenders will also consider factors such as your business’s industry, the purpose of the loan, and your ability to repay the loan. For first-time borrowers, personal credit may make a difference. However, those with established business credit may not need to worry about their personal credit, provided their business accounts are in good standing.

What is a personal guarantee?

A personal guarantee is a promise by the business owner to personally repay the loan if the business is unable to do so. Personal guarantees are common for unsecured loans and provide an additional layer of security for the lender. Some small business lenders may include a personal guarantee in your loan contract.

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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Should I Get a Business Loan or Line of Credit?

Manage Your Money
by Brandon Wyson11 minutes / June 17, 2024
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Is a business line of credit right for my business.

Every financial decision for your business is important. Especially if you are thinking of taking on financing, it’s essential that you know with some real certainty that you are getting the right product for your needs. Many small business owners likely find themselves stuck between two popular choices, those being business loans and business lines of credit. While both types of financing have their benefits, it’s more than possible that one may suit your needs better than the other. Let’s get into the key differences between a business loan and a line credit.

What is a Business Loan?

A business loan is basically an agreement between a lender and a borrower in which the lender gives a one-time lump sum of money to a borrower. The borrower is then responsible for paying back that lump sum to the lender with interest. What we’re describing here is also called a term loan, a loan that you pay back over a certain term.

Depending on the lender and the merits of a borrower, business loans can be for amounts up to $5 million and be as long term as 25 years. But the important thing to remember when it comes to business loans is that they generally only account for one singular sum of capital. When you pay back a loan, you can of course take out another one. But business loans are almost always one-time, lump sum transactions.

Business Loan Benefits

Business loans come with specific benefits, including:

  • Set Repayments: Business loans usually have a fixed rate, which means fixed monthly payments throughout the life of the loan. This makes it easy to budget for repayments.
  • Relatively Lower Interest Rates: Generally speaking, business loans have a lower interest rate than business lines of credit. However, rates depend entirely on your credit history and financials.
  • More Financing Term Options: Business loans can provide both long- and short-term financing, making them suitable for large investments or smaller expenses..

Business Loan Drawbacks

There are reasons that some business owners choose a business line of credit over a loan. Drawbacks to a business loan include:

  • Collateral Requirement: If you’re applying for a secured business loan, you’ll be required to put up collateral for the loan.
  • Application Process: The application process for business loans can be more complex than other forms of financing, such as lines of credit or credit cards. However, this can vary form lender to lender.
  • Fixed Funding Amount: If you find that you need more funds than you received from the loan, then you’ll need to apply for additional financing.

Business Loan Requirements

When applying for a business loan, there are some almost universal requirements that lenders will need to see before approving you. Let’s get into the most universal of those requirements here.

A Specific Purpose for Your Business Loan: Lenders will want to know what you plan on using your capital for. Business loans, however, don’t have to be used to buy one specific thing. While many people use term loans to secure real estate or other expensive assets for their business, it is more than viable to say that you plan on using your business loan to increase your working capital.

Collateral: Just about all business loans today will require some form of collateral. There are, of course, always exceptions. But it is a good idea to anticipate your lender asking for collateral if you are looking for a business loan. Good examples of collateral include real estate, heavy equipment, or even standing inventory. Basically, collateral can be any business asset of close-to-equivalent value of the loan you are looking for.

Required Documents: Every lender will require some amount of paperwork from a borrower before moving forward on a loan. Having PDF copies of all of these forms before applying will likely save you some time later in the process.

  • Your most recent business bank statements
  • Your most recent tax returns
  • Forms on ownership and affiliation if necessary
  • Proof of your collateral
  • Disclosures of other debt
  • Your driver’s license or other valid state ID
  • Any documents related to a reincorporation or business name change
  • Any business insurance polices you currently hold

Time in Business: The longer your business has been in operation, the better you will look to lenders, generally speaking. It’s not uncommon for lenders to ask for at least two years of operation for business loans.

Business Plan: While not universally required, it’s more than possible that some lenders may expect you to present a business plan that includes (among other things) what you plan on using your business loan for. Your business plan ought to be a comprehensive overview of your current structure and how you plan to grow or change over at least the next five years. The more involved and specific your plan is, the more trustworthy and responsible you are likely to appear to lenders.

What is a Business Line of Credit?

A business line of credit is essentially a supply of capital provided by a lender that you can draw and repay as long as the line stays open. Similar to traditional credit cards, lines of credit have a credit limit, often have monthly billing periods, and borrowers are only responsible for money that isn’t paid back into the credit line before the end of a billing period. But unlike credit cards, which can only be used for transactions that allow card payment, lines of credit are real working capital that businesses can use to cover traditional expenses like payroll or even inventory costs.

Business Line of Credit Benefits

Business owners may prefer to select a business line of credit over a loan due to the following benefits:

  • Flexibility: A business line of credit provides flexibility in accessing funds. You can borrow as much or as little as you need up to your credit limit, making it ideal for businesses that might need additional funds down the road.
  •  Interest Only on What You Use: While a term loan charges interest on the entire loan amount, a business line of credit only charges interest on the amount you draw. This could
  • Different Payment Options: Some business lines of credit let you choose how often you want to repay, whether that be every week or every month. This gives small businesses even more flexibility.

Business Line of Credit Drawbacks

Drawbacks of a business line of credit include:

  • Variable Interest Rates: The interest rates on a business line of credit are often variable, meaning they can fluctuate with market conditions. This variability can make it challenging to predict future repayments.
  • Potential for Overborrowing: When not managed correctly, a business line of credit makes it easy to accidentally borrow more than you’re eligible for. Always keep an eye on the total line of credit and the amount drawn.
  • Collateral Requirements: Just like a term loan, some lenders may require collateral, such as business assets or personal guarantees, to secure a line of credit. This adds a layer of risk, as failure to repay could result in the loss of assets or personal liabilities.

Business Line of Credit Requirements

Every lender has their own requirements and makes agreements on a case by case basis. But when applying for a line of credit, there are some basic things that just about every lender will be looking for. Let’s get into those major requirements here. But it is important to remember, also, that some lenders may require more and there are likely more than a few who could ask for less.

Incorporated Business: While there are certainly some online lenders willing to give lines of credit to sole proprietors, the majority of todays lenders are looking for incorporated (as well as registered) businesses.

Use of Funds: The majority of lenders, especially for larger lines, will be looking for a proposal that lays out your general intentions. Unlike a business plan which explains your overall aspirations and plans for growth, your proposal ought to be solely centered on how you plan on using your line of credit.

Collateral: There are two distinct types of lines of credit, one which requires collateral and one which does not. A secured line of credit is a line of credit that is secured with collateral from the borrower. An unsecured line of credit is a line with no collateral. As you may guess, a line of credit with no collateral represents a higher risk factor for lenders and therefore often comes with a higher interest rate. Further, the majority of larger financial institutions like banks and credit unions who offer lines of credit generally offer secured lines. This means that if you don’t have the sufficient collateral to secure a line, you may want to look into online lender options.

Required Documents: Lines of credit require many of the same documents as a business loan.

  • Your most recent business bank statements
  • Your most recent tax returns
  • Disclosures of other debt
  • Your driver’s license or other valid state ID
  • Forms on ownership and affiliation if necessary
  • Proof of your collateral (If you are seeking a secured line)
  • Your loan proposal
  • Any documents related to a reincorporation or business name change
  • Any business insurance polices you currently hold

Time in Business: It is likely that larger financial institutions will be looking for potential borrowers who have been in operation for at least two to three years. It’s possible to find online lenders asking for less but, as the rule goes, the younger and less proven a business is, the more likely interest rates will go up.

Industry: Unlike many business loans, which are anything but industry specific, some lenders may shy away from certain industries when it comes to lines of credit. The industries that get considered ‘risky’ are decided by the risk departments at each individual lender but here are some of the industries that tend to be classed as high risk and, therefore, may have more trouble securing a line of credit:

  • Restaurants / Food industry
  • Retail
  • Wholesaling
  • New or used car dealers
  • Casinos (excluding hotels)

While this doesn’t represent every high-risk industry, this list represents businesses that are more sensitive to economic cycles, deal mostly in cash, or are subject to a large amount of legal regulation.

Choosing Between a Business Loan vs Line of Credit

Where to Get a Business Loan or Line of Credit

There are three major ways to connect your business with a loan or a line of credit. Let’s explore them each, one by one, to better understand what makes one a better match for a business compared to another.

Banks

With some exceptions, securing a line of credit or a loan with a major bank requires the most paperwork. On top of that, banks often have the highest requirements for credit scores as well as revenue and time in business. What you get in exchange for those higher requirements, however, are more generous term and interest rates.

Online Lenders

Online lenders represent the quick and flexible alternative to the traditional bank option. Online lenders have grown in popularity over the past generation and become a lifeline for younger businesses thanks to both their generally more lenient requirements as well as the speed in which lines can be opened and loans can be distributed. What you get in exchange for that speed and lower scrutiny is, of course, more cautious interest rates and terms.

Community Development Financial Institutions

Community Development Financial Institutions (CDFI) are groups that specifically serve under-resourced communities. If you are a business owner in a rural area or are a member of a special interest group, there is a good chance that there is a CDFI who may be interested in working with you.

Choosing the Right Financing for Your Business

While business loans and lines of credit both provide working capital for your business, the way you access that capital is completely different. Business loans are usually a good match for large one-time purchases like real estate. Since your capital is coming in as one lump sum, it generally makes the most sense to spend it in the same way. A line of credit, however, is a longer-term relationship between a lender and borrower. It is more than possible for a line of credit to stay open for a couple of years.

A line of credit, then, should be used for predictable and repeatable expenses that you are certain you can pay back before the end of a billing period so you can avoid interest. Businesses who handle lots of invoices or who only see payouts once or twice a month are the most likely to benefit from the type of working capital that a line of credit can supply.

 

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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What is a Non-Recourse Commercial Loan

Manage Your Money
by Brandon Wyson6 minutes / June 2, 2024
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Learn more about non-recourse financing

An effective means to expedite a business’s growth is tactical commercial financing. A factor that may dissuade businesses from finalizing a loan agreement, however, is fear of default and the subsequent recourse from lenders. There are actually several types of loans where lenders will agree to not seek recourse after borrower default, which are known as non-recourse commercial loans.

What is Non-Recourse Loan Financing?

A non-recourse commercial loan is an agreement between a lender and a borrowing business where the borrower is not personally liable if they default on the loan. In the case a borrower defaults, lenders may not repossess any of the borrower’s property that was not originally put up for collateral. Lenders may seize profits from the business, but the business owner’s personal assets may not be taken.

What is The Difference Between a Recourse Loan Versus Non-Recourse Loan

Traditional recourse loans require borrowers to make a personal guarantee that they default on their business loan, the lender may seize bank accounts and other assets until the original debt is covered. In the case of a non-recourse loan, lenders may only seize agreed upon collateral in the event of borrower default. Even if the collateral does not sufficiently cover the full value of the loan, the lender cannot seize the borrower’s personal assets to recover losses from the original loan.

Benefits 0f a Non-Recourse Commercial Loan

Non-recourse commercial loans come with various benefits for small business owners, including:

  • Limited personal liability in the event of a default as the loan is typically backed by collateral
  • Asset protection for businesses outside of assets used to back the non-recourse commercial loan
  • Relatively low financial risk while still securing financing

Carve-Outs and the “Bad Boy Guaranty”

Most non-recourse financing agreements have exceptions where the lender may collect beyond collateral in the case of borrower default. Exceptions to non-recourse agreements are called “carve outs,” or “Bad Boy Guarantees.” Most carve outs protect lenders in the case a borrower either misrepresented their intentions or committed a crime. Several common carve outs in non-recourse financing agreements allow the lender to seek recourse outside of collateral, including:

  • Borrower files for bankruptcy
  • Borrower commits fraud or other criminal activity
  • Borrower fails to pay property taxes
  • Borrower fails to maintain required insurance

If a borrower commits any of the acts specified in an agreement’s carveout clause, the non-recourse protections of the original agreement are nullified.

Qualifying for Non-Recourse Financing

Since non-recourse commercial loans are much riskier for lenders, conditions for approval are generally much more strict. Among traditional qualifications of positive balance sheets, a good business credit score and sufficient collateral, applicants must also meet the terms of a non-recourse guarantee. Similar to carve outs, the non-recourse guarantee specifies that the borrower, or the guarantor, must maintain certain obligations to retain non-recourse status.

A non-recourse lender may require that the borrower sign a guarantee of performance, meaning that certain goals remain on schedule, or a guarantee of payment. Guarantees of payment stipulate that any profits made from the project financed by the original loan must be routed back to pay the accrued debt.

Since lenders face significantly more risk when making a non-recourse loan, non-recourse agreements are generally reserved for exceedingly low risk-of-default borrowers taking on long-term projects.

Types of Non-Recourse Commercial Loans

Real Estate

The most common type of non-recourse financing is non-recourse real estate loans. In the case of real estate loans, non-recourse deals commonly stipulate that the borrower must pay back the loans with profits made after selling the real estate – which is a guarantee of payment. If the property is developed, but does not sell or does not make a profit, the real estate itself is often considered sufficient collateral.

SBA

Non-recourse loans secured by the SBA are traditionally used to help small businesses secure financing for fixed assets such as real estate, office facilities and sometimes equipment. To decrease the direct risk for lenders, the SBA assumes a portion of the risk  for the loan and guarantees to cover a percentage of a loan’s full amount in the case of borrower default. If a borrower defaults on a SBA-secured non-recourse commercial loan, the government, not the lender, is liable for the guaranteed portion of the loan.

Development

Another common type of non-recourse commercial loan are non-recourse development loans. Development loans are specifically for developing commercial property and often finance a project through its entire process. Development loan agreements usually state that the borrower must begin repayment once they have started earning a profit. If a project is not profitable or does not complete development, then the loan will often be considered defaulted. When a non-recourse development loan defaults, the property which was financed will then be seized as collateral.

Non-Recourse Factoring

Similar to  non-recourse loans, non-recourse factoring agreements stipulate that in the event an invoice cannot be paid, the factor is liable for the losses, not the customer. Non-recourse factoring agreements, however, tend to have higher fees and/or more restrictive terms because the risk is much higher for the factor. Factors are more likely to offer non-recourse invoice factoring services to customers who handle a large and constant flow of invoices and whose clients have good credit. Depending on a company’s size and invoice capacity, recourse and non-recourse factoring are both viable options. Lenders also may consider the size and volume of a customer’s invoices before offering non-recourse factoring options.

Non-Recourse Overview and Considerations

Non-recourse financing may be a misleading name for this kind of financing, as almost every type of non-recourse deal still allows lenders to seek recourse of some kind. Non-recourse agreements are almost always reserved for deals where lenders can recoup their losses without additional recourse. However, semantics aside, if you’re able to qualify for non-recourse financing it can be a great way to keep your business on the growth track.


Non-Recourse Commercial Loan FAQs

What are the disadvantages of a non-recourse loan?

Because non-recourse commercial loans can saddle the lender with higher risk, the lender will usually offer lower loan amounts or require higher interest rates for these types of loans. Compare rate and terms of non-recourse and recourse commercial loans before choosing a type of financing.

How hard is it to get a non-recourse commercial loan?

Qualifying for a non-recourse commercial loan could be more difficult than qualifying for other types of small business financing. This could include higher business and personal credit score requirements.

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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Small Business Loans for Veterans

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by Brandon Wyson16 minutes / May 31, 2024
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A guide to small business loans for veterans

Veteran small business owners are a strong community of achievers with a background in determined hard work. It’s no wonder so many veterans shift into starting and running a business when they rejoin civilian life. However, while time spent as an active duty service member can be an advantage when dealing with the demands of day-to-day business operations, it can also impede veteran business owners’ chances of obtaining business financing – with service-related gaps in financial history making it more challenging (and more complicated) for veterans to get business loans than their non-military counterparts. There are still great options out there, though.  It just may take a little more time and a little more paperwork to put your hands on some funds.  Let’s explore the most popular loan options for veteran small business owners.

Small Business Loan Options for Veterans

Veteran entrepreneurs can choose from a large selection of business loans and financing options provided by traditional banks and alternative lenders, along with loans that are backed by the federal government through the Small Business Administration (SBA).  Loan options vary by lender and will have their own set requirements laid forth by each lender. Depending on your specific situation, one loan type will likely serve you better than another so fully researching each option to select the best financing for your business is critical.

Personal Loans for Veteran-owned Businesses

Let’s begin with one that you may not expect: It is more than possible to take out a personal loan to boost your small business. While business loans are frequently based on the overall financial standings of your enterprise itself, the terms of personal loans will be based on your personal creditworthiness and financial health. Using personal loans for your business, however, has its own set of rules and considerations.

Pros of Using a Personal Loan for Your Business

  • While there are options for secured personal loans, the majority typically do not require collateral, which means you’re less likely to be risking any of your personal assets to finance your business with this option.
  • For new and very small businesses, it can be much easier to qualify for a personal loan than a traditional business loan.  In addition, you can use the funds from your personal loan for virtually any expense.
  • You can get access to funds quickly – usually within a few days after you are approved, though some personal loans offer same-day funding.   And personal loans typically come with very reasonable terms, ranging anywhere from two to seven years (though some lenders will go out as far as 10-12 years for much larger personal loans.)

Cons of Using a Personal Loan for Your Business

  • You will have access to less money with a personal loan.  In rare situations, some lenders do offer personal loans up to $100,000; but, typically, most lenders will only go up to $50,000 for very qualified candidates.
  • APRs tend to be much higher with personal loans, with the average being about 11.05% in 2023, according to Bankrate.  In addition, interest on a personal loan isn’t tax-deductible, unlike interest paid on a business loan.
  • Regardless of whether you go for a secured or unsecured personal loan, you will be putting your personal credit on the line.  If you do opt for a secured loan, you will also be putting personal assets at risk if you are unable to pay the loan.

Taking all of the positives and negatives into account, veteran business owners should be cautious when they decide to leverage a personal loan for business use.  The scenario is best applied for new or very, very small businesses that aren’t likely to be approved for business-specific financing.

Loans from Family & Friends

Depending on your circumstances, taking out a loan directly from friends or family may be one of the best options available to small businesses – especially startups. While traditional financing will uniformly lay out terms and conditions (with the expectation of prompt payment), loaning money on a personal level requires a level of trust and understanding between both parties that extends beyond a pen-and-paper contract.

Pros of Friends & Family Loans

  • Friends & Family loans can be much more affordable for business owners, as individuals with this personal relationship often won’t charge as much in interest. In fact, they can waive interest overall for other benefits, such as a stake in ownership, royalties/revenue share, or even a lifetime discount for your products.
  • This type of loan also has the potential to add more flexibility than “official” lenders.  If you need to delay payment or you want to pay off the loan early, friends and family are more accommodating and less likely to charge you additional fees for these types of scenarios.
  • These loans are a particularly great option for veterans who have a limited credit history that precludes them from accessing financing elsewhere.

Cons of Friends & Family Loans

  • You’re making business personal which could negatively impact your relationships.  Missed payments, disputes over a loan agreement, or a sense of general awkwardness if your business isn’t making money as quickly as you’d hoped, could all lead to a damaged personal relationship.
  • While these loans are great options for those with limited credit, they can also be a detriment to your credit profile since they will not be helping you to build or improve your credit standing – which is something that you will need if you want to get more financing from a traditional lender down the line.

Like personal loans, friends and family loans can be a great option for new and very small businesses.   They can also be a viable loan option for business owners with limited or bad credit. However, make sure you have a strong agreement – that both parties are happy with – in place to help insulate your relationship from any potential damage.

Term Loans

Term loans are what most business owners think of when they hear the word “business loan”.Term loans are one of the most straightforward ways to get a lump sum of working capital for your small business.  Interest rates on military business loans like these can be fixed or floating and they are available as both short-term and long-term loans. Business term loans can be used for virtually any business purpose, but some lenders do have restrictions on how you use the funds.

Pros of Using a Term Loan for Your Business

  • With business term loans you don’t have to give away any ownership of your business to get access to funds like you would with some other types of financing
  • There are many types of business loans available so finding one to suit your exact needs and business situation is relatively easy so long as you qualify.
  • Unlike other kinds of financing, interest payable on a term loan is sometimes tax deductible. You should always check with your accountant prior to signing a loan contract to determine if you can take advantage of this tax deduction.

Cons of Using a Term Loan for Your Business

  • Business term loans tend to have stricter requirements than other types of business financing (especially when it comes to credit scores) and they typically require quite a bit of paperwork – from bank statements and tax returns to financial statements and a business plan
  • If you own a newer or very small business, term loans typically aren’t a great option as it can be difficult to meet business and revenue qualifications set by lenders.
  • If you need money quickly, you may want to consider other financing options.  Business loans tend to take longer – from several days to several weeks – to get a decision on whether or not you were approved.  In addition, once you are approved, it can take another several days to weeks to get the funds in your account.

SBA Loans

For honorably discharged veterans, service disabled veterans, active duty military members who are eligible for the TAP program, active reservists, and National Guard members, the SBA formerly offered loan programs designed to help you get access to the capital you need to start, grow and manage your business. These programs are no longer active and the SBA has not commented on whether or not they plan to restore them the future.

SBA 7(a) Loan

7(a) loans are the most well-known and the most common type of SBA loans, which actually represent an entire class of loans with limited fees, capped interest rates, and a partial guarantee of the total capital offered in the loan. Standard 7(a) loans can offer up to $5 million in capital.  The terms of a 7(a) loan are typically determined by your use of the funds.  For example, if you plan to use the loan for real estate, terms can go out as far as 25 years but if you plan to use the loan to purchase equipment, for example, terms are capped at 10 years.

Under the Veteran’s Advantage program guaranty fees for standard 7(a) loans were discounted by 50%. This program ended in 2018.

SBA Express Loans for Veterans

SBA Express loans are a type of 7(a) loan that boasts an accelerated review turn time of 36 hours by the SBA.  These loans can go up to $500,000 and have terms that can extend up to 10 years.  Under the Veteran’s Advantage Program, your up-front guaranty fee for an express loan is 0%. This program also ended in 2018.

SBA Microloans

SBA microloans are only offered up to $50,000 and are generally considered the best option for veteran small businesses still in the early stages of business. According to the SBA, interest rates will always depend on the intermediary lender, but generally range from 8 to 13 percent. Further, the maximum repayment term possible is six years.

Military Reservist Economic Injury Disaster Loan (MREIDL)

While not specifically for veterans, this is a helpful loan if you have an essential employee who is a reservist that was called up to active duty.  MREIDLs provide funds to assist eligible small businesses to meet their ordinary and necessary operating expenses that have been severely impacted due to the absence of the now-active reservist employee.  Loan amounts can go up to $2 Million, but the actual amount will be determined based on SBA calculations of the actual economic injury to the business.

Pros of SBA Loans for Veterans

  • SBA loans tend to be the most cost-friendly loans available to all small business owners.  They were formerly even more so for Veterans through the Veteran’s Advantage Program fee reductions.
  • There is a variety of loan types that are backed by the SBA that come with favorable interest rates and longer payment terms making it easy to find a loan that can fit your current business needs

Cons of SBA Loans for Veterans

  • There is a ton of paperwork involved when applying for an SBA loan and there are many strict requirements for qualification, including the fact that you need to exhaust all other forms of financing first.  In addition, collateral may be required for approval.
  • While there are a variety of loans available, you are limited on how you can use the funds based on each loan type.  It’s important that you nail down exactly how you plan to use your funding to ensure that you apply for the appropriate type of SBA loan.

Who Qualifies for a Veteran Small Business Loan?

To qualify for a loan under the SBA’s Veterans Advantage Guaranteed Loans program, at least 51% of the small business applying must be owned by:

  • an honorably discharged veteran
  • an active service member who is eligible for the military TAP Program
  • a service-disabled veteran
  • a reservist
  • National Guard members
  • the current spouse of a veteran, active duty service member or National Guard Member
  • widowed spouse of a soldier who died in the line of duty or as the result of an injury connected to their service
  • Business loan eligibility depends on multiple factors including business credit score and average annual revenue

Businesses will also be required to meet minimum qualifications including credit score, annual revenue, and time in business.

How to Get a Small Business Loan for Veterans

Getting a business loan can be a complex and time-consuming process.  Each lender and each loan type comes with its own requirements, risks, and rewards so it’s important for you to do extensive research before even applying. From understanding your own business needs to breaking down the total cost of financing for each loan type, there are multiple steps you should take when going through the process of getting a business loan.

Step 1: Determine your financing needs

First, look at your business’s financial requirements to determine how much financing you need.  Outline the purpose of the loan, making sure to consider working capital, equipment purchases or other planned growth. Not only is this often required during your application, but it also shows lenders that you’ve done your due diligence.

Step 2: Choose the best loan program for your business

Compare loans available to veterans and choose the option that fits your business and needs best. Double check terms, interest rates, loan amounts, and application requirements

Step 3: Gather the necessary documents

During the application process, you’ll be asked to submit information about your, along with details on your veteran status. Application requirements will vary but be prepared to provide at least the following:

  • proof of veteran status
  • at least three recent business bank statements
  • both personal and business financial statements
  • a business plan
  • recent tax returns.

Step 4: Apply

Once you’ve determined which small business loan program is best for your business, it’s time to fill out and submit your application.  Next, wait to hear back from your lender to find out if you’ve been approved.

Additional Financing Options for Veteran Business Owners

While there are several great veteran business loan programs out there, loans luckily aren’t the only financing option available for veterans.  Here are some alternative financing options that veterans should consider based on their needs:

Revenue-Based Financing

Revenue-based financing is a type of financing that allows businesses access to working capital through a pre-purchase of future revenue. Essentially, a financing partner or lender will provide you with a lump sum of cash based on expected future sales.  You “sell” this future revenue at a discounted rate to get money to run your business today.  This is a short-term type of financing with terms averaging around 6-12 months.  Payments are typically made daily, though some lenders allow for weekly or monthly payments and payment amounts are based on a pre-determined percentage of that day’s revenue.  This percentage is fixed, so if you make less in sales on any given day, your payment to your lender will be less that day.  If you make more sales, your daily payment is larger.

Equipment Financing & Leasing

If you’re looking for financing to add or upgrade business equipment, equipment financing or leasing may be the way to go.  Depending on the lender you choose, you may be able to finance 100% of the cost of the equipment and the asset that you are purchasing typically acts as collateral.

Business Line of Credit

A line of credit is one of the most flexible forms of financing available to small business owners. This revolving form of financing allows you to draw on funds when needed and you only pay interest on the amount you use.  Businesses can draw and repay multiple times throughout the term of the line. Lines of credit tend to suit the veteran business owner either looking to keep more working capital on hand during slow seasons or those who are expecting a repeating and predictable expense that would make too large of a dent in available cash flow.

Alternative Financial Resources for Veterans

If formal financing arrangements aren’t in the cards for you right now, there are still several great ways for veteran small business owners to connect with the capital they need.

Grants for Veteran-owned Businesses

There is a robust collection of organizations that offer grants specifically for veteran business owners, like the Military Entrepreneur Challenge and the Texas Woman’s University Veteran Woman Entrepreneur Grant.  Beyond simply offering grants, several of these organizations offer additional resources for veterans, doubling as mentorship organizations and offering a great community for the veterans who join up. And at that, many also have connections for picking government contracting work or special resources for disabled veterans.

Crowdfunding

Americans love their troops and any veteran business owner with an interesting business plan or a charismatic screen presence ought to consider bringing their business to crowdfunding.  Crowdfunding is a way to raise capital for your business by tapping into your extended network, whether that be family, friends, customers, and/or individual investors. There are two primary forms of crowdfunding – rewards (where you offer something non-money related to those who contribute money) and equity (where you offer equity in your business in exchange for monetary contributions).  While the main purpose of crowdfunding is to raise capital, there are additional benefits as well including brand awareness, growing your customer base, and potential partnerships.

Business Credit Cards

A business credit card is a great resource, especially for filling small gaps in your operations or giving yourself a small cushion for your working capital. When choosing a business credit card, however, be certain to weigh as many options as possible as the sign-on deal of your card is likely the most lucrative benefit you can take advantage of.


Veteran Business Loan FAQs

Does the VA offer small business loans?

No, the Department of Veterans Affairs (VA) does not offer business loans.  However, there are many small business financing options available to veterans, including SBA loans, term loans and personal loans.

How much can a veteran borrow through a small business loan?

Small business loan amounts for veterans can vary depending on the type of business, annual revenue, and both business and personal credit scores. Many loans also set limits on how much any applicant can borrow, including veterans.  Review different financing options to find one that meets the needs of your small business.

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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Are There Small Business Loans for Women?

Manage Your Money
by Brandon Wyson12 minutes / June 11, 2024
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Are there Business Loans for Women?

It’s been noted time and time again that female entrepreneurs begin in the business world with a social impediment that their male counterparts don’t. But at the same time, today there are more female business owners than ever before. However, women are still statistically less likely to be approved for financing than men.

While there technically are no programs reserved specifically for supplying loans for female business owners, there are a number of resources available to women business owners to help them run and grow their businesses. Let’s discuss the state of women and the small business world on three levels:

  1. Why women are less likely to get approved for financing
  2. The top financing options available today, and how to better set yourself up for an approval
  3. Grants and other development programs created specifically for the benefit of women-owned businesses

Why Are Women Being Approved Less for Business Loans?

Even though women make up a growing percentage of today’s small business owners, there is still a large funding gap when you compare business financing secured by women with that secured by men.  While there are many reasons for this gap, one of the largest is being unable to meet the basic qualifications set forth by most lenders. Below are some of the primary reasons women have more difficulty securing business loans than men:

Industry

Every lender considers the industry of a business when reviewing a loan package.  Why?  Because some industries are inherently riskier than others. One of these risky industries is retail which tends to have higher expenses and lower profit margins.  Many women-owned businesses are in the retail sector.

What can you do about this?
Completely changing the industry of your business is likely not an option, but there are a few things you can do – regardless of the industry you’re in – to help improve your options for the future including:

  1. Figuring out ways to lower your business overhead
  2. Building a plan to increase your revenue
  3. Start by borrowing smaller amounts of money and ensuring that you pay them off on time

Time in Business

Regardless of who owns a business, if the business is in its early stages of operation (typically under two years in business), many lenders will not provide financing because the business does not have enough history to show it can maintain profitability and meet payment obligations. The number of women-owned businesses has been picking up significantly over the past couple of years, so many of them simply haven’t been in business long enough to qualify for conventional financing.

What can you do about this?
If you’re able to, you can opt to wait out this two-year period.  But, in order to keep a business running – especially in its early years – financing is needed.  Fortunately, there are some alternative lenders who are willing to be more lenient about this requirement if you show both good credit and at least six months of very strong revenue and consistent positive cash flow.

More Risk-Averse

There are a number of studies out there showing that women are more averse to taking risks than their male counterparts.  This can show itself on many fronts in a business – including women being less like to bring in outside investors (they don’t want to have to run decisions by others) and being less likely to take on capital that comes with a higher cost, which limits their ability to take advantage of opportunities to grow their business.

What can you do about this?
Ultimately, being risk-averse can be a good thing – but in business, taking on some risk is necessary.  If you have a legitimate growth opportunity in front of you, it could be to your advantage to reconsider what financing options you are willing to use.  Absolutely still consider it as a risk, but be strategic in that consideration.  Run all of the numbers.  Determine if paying higher rates is worth the cost because, ultimately, your new endeavor will cover that cost of financing and give you additional profit at the same time. Truly consider if bringing in investors will impede your decision-making processes as much as you think.  Only you can answer these questions and make the final call, but it is definitely something that you should research and consider strategically before making that call.

At the end of the day, it’s all a numbers game when it comes to lenders AND running your business.  Improve your numbers and you improve your chances of being approved and growing your business.

Best Small Business Loans for Women

Let’s break down the types of loans that are available today, covering those that are not just popular but also attainable for many of today’s women business owners. There are several ways to connect your business with a business loan – from online lenders to traditional financial institutions. But before partnering your business with a lender, it’s key to consider each type of small business loan on the table and which may be best for you.

SBA Loans

The Small Business Administration (SBA) doesn’t technically offer loans themselves but instead guarantees loans carried out by partner lenders and traditional banks. Because of this guarantee by the Federal Government, the interest rate of SBA loans tends to be much lower – following the Prime Rate (this is the interest rate benchmark set by the Federal Reserve System on a nightly basis). Lower rates and a federally-backed guarantee make SBA loans a great option for reducing risk for both the lender and business owners.

SBA 7(a) Loan

The SBA 7(a) loan is often called the most popular of the SBA loans for women business owners. And for good reason: the SBA 7(a) loan is versatile. Business owners can finance up to $5 million with the 7(a) program. From real estate to payroll, an SBA 7(a) loan can meet just about any reasonable business need.

SBA Express Loans

SBA Express loans fall within the 7(a) loan program.  They come with lower loan amounts than the standard 7(a), capping out at $500,000 but they also come with an expedited review by the SBA.  Express Loans can be used for a wide range of business needs – from purchasing equipment or real estate or for basic working capital.  If you are a female veteran business owner, this is an excellent option for you to consider as the Veterans Advantage Program allows for significantly reduced fees with the SBA Express Loan.

SBA Microloans

Microloans from the SBA generally have smaller payouts and shorter repayment terms, as the name would imply. Specifically, SBA-guaranteed microloans are offered up to $50,000. The most notable difference between a 7(a) and a microloan, however, is that microloans cannot be used for refinancing or buying real estate. SBA Microloans are a great loan option for women with businesses in the startup phase because they come with fewer requirements than the popular 7a loans

Term Loans

Term loans are one of the most widely used types of financing available to businesses today. Term loans are generally what most people think of when they hear the word ‘loan’. Term loans are an agreement between a business owner and a financial institution to give an approved loan amount with a set repayment schedule. That repayment schedule is the ‘term’ in term loans.

Term loans generally give the full principle of a loan upfront. Because of this, term loans can be very helpful for getting more cash flow into your coffers. Depending on what you are looking to finance, term loans can last either a fairly short amount of time or several years. Of course, term loans with longer terms and more capital at stake will generally require a higher credit score, more time in business, and a strong history of positive financial statements.

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Personal Loans for Business

If you’re in a pinch, it is entirely possible to take out a personal loan and use the funds as capital to better your business as long as your lender has no restrictions.  If you have decent credit, a personal loan could end up providing you with better interest rates than a business loan, which is always a win.  However, there are some drawbacks:  personal loans typically come with much lower amounts than traditional business loans.  In addition, you are potentially putting personal assets on the line if you fail to meet your payment obligations.   When used responsibly, this can be a great option for women-owned businesses, particularly those in the beginning stages of the business journey.

Loans from Family & Friends

Taking out a loan from friends or family rather than a financial institution has a whole different set of rules. Rather than your financial record being the biggest indicator of your trustworthiness, you’ll functionally be relying on your social record. This is, once again, a rather common option for female entrepreneurs in the beginning of their business journey.

And while there are several big-name success stories of today’s Fortune 500 who started their way with capital from a friend or family, the main rule of financing remains here: only borrow the money you are certain you can pay back. Instead of just affecting your credit, you risk breaking the ties that bind.

Steps for Women to Get Small Business Loans

Female loan applicants ought to start by laying out a plan that considers every step of the loan journey – from completing an application all the way through to how you plan on spending your capital if you’re approved AND how to recover if you’re declined for a business loan.

Step 1: Determine how Much Capital you Need

Before even looking at your loan options, sit down and find a firm figure as to how much capital you want and, further, how quickly you would like to get it.  You should list out all of the items/services your business needs and then research the estimated cost for each.  Once you have the list fully compiled, you need to prioritize them.  From there you can gauge a range of financing amounts that will help you accomplish your goals.

Step 2: Look into Your Prequalification Options

Several online lenders offer full prequalification at no cost to you. Using pre-qualification is a great way to learn how lenders see your business.  It can also help you determine just how much loan you can afford.  Once you’ve got your prequalification numbers, it’s time to go back to your list of needs and shuffle as necessary.

Step 3: Select your lender

Choosing your lender should not just be based on interest rates. Choosing a financial institution or online lender is a mutual recognition of value and trust. Remember that your lender is pitching themselves to you just as much as you are pitching your business to them. Look closely at their reviews to see how they treat customers.  Ask questions to see if their business practices will meet your needs, including:

  • Will they work with you to come up with the right payment plan for your business?
  • Do they allow early pay-off without any penalties or fees?
  • Do they provide support to their customers even after they are funded?

There’s a variety of ways to determine if a lender is the right financing partner for you – it all just depends on what, as the customer, would like to see in that relationship and then finding the best lender to fit that wish list.

Step 4: Gather paperwork

The best lenders are generally quite upfront about their paperwork requirements but the most common paperwork to expect and have handy are:

  1. Six most recent bank statements.
  2. Two years of business tax returns
  3. Business Plan
  4. Financial statements, including your income statement and balance sheet
  5. Budget and cash flow projections
  6. Government documents including all business licenses, your business registration and your EIN

Get Ready to Apply: Small Business Loan Application Checklist


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Not all lenders will require all of these documents, but some will, so the specific paperwork you need will be determined by the lender you select.  Your chosen lender will be able to provide you with the full list that they require for underwriting and approval.

Step 5: Apply for your loan

This is the easy part. If you have a good financing partner, application processes ought to be smooth and straightforward.

Step 6: Compare offers

Lenders will often give you multiple term options, some lenders, like Kapitus, even have the ability to offer you different financing products based on your single application. The best lending partners will consider your business structure and guide you toward the terms that make the most sense for you. But it is also essential to do your own research and confer with all those who are involved with your business’s finances.

Step 7:  Read the Fine Print

We all know it. But let’s say it again for the sake of how serious this is: always read the fine print of your loan agreement and make sure you understand everything in your BEFORE you sign on the dotted line.

Additional Financing Options Women Business Owners Should Consider

Beyond small business loans, there are several other types of financing that are worth considering depending on your needs and current situation.

Revenue-Based Financing

Instead of paying central attention to your credit score and personal financial reputation, revenue-based financing approvals are based more heavily on exactly what you would expect: your revenue. While there are still minimum credit score requirements to be aware of, revenue-based financing generally allows the strength of a business to speak for itself.

Revenue-based financing is not a loan.  Instead, a lender will purchase a percentage of your future sales.  This gives you cash on hand today for sales you wouldn’t make until tomorrow (or over the next couple of months).  Because revenue-based financing is not a loan, there is no actual interest rate.  Instead, there is a factor rate that will not change throughout your agreement with the lender.  Repayment is made by paying a percentage of your daily, weekly, or monthly sales (depending on the contract terms with your lender) until the entire amount provided, plus the factor and any fees are paid back. Revenue-based financing can be extremely expensive, so it should only be used very strategically and is ideal for opportunities that would generate a large enough return to both cover the cost of the financing and put profit in your account.

Business Line of Credit

A business line of credit is functionally a borrowing limit that allows your business to take out capital until a predefined upper cap. You pay interest only on the portion of the line you’ve used. And, once you pay back what you’ve used, you can use it again, making one of the biggest advantages of a business line of credit is its flexibility.

For example, if you take out a line of credit with an upper cap of $50,000 and you only use $5,000 in a billing period, you would only pay interest on that $5,000 and not the entire $50,000. Further, if you pay the full balance of your line before the end of the month, you won’t pay any interest.

Lines of credit can be used for almost any business purpose, so it is a great way to cushion your bottom line and cover unexpected expenses.

Equipment Financing

Equipment financing is a great way to get expensive or timely machinery for your business. The logic goes that you approach a financial institution with the specifics on a piece of equipment you need for your business.

The institution can agree to pay either a percentage or the entire price of the machinery on the agreement that you will pay back the principal with the assistance of that machinery. The equipment in question also tends to act as collateral or in some cases the lender may demand to take out a lien on the equipment in the place of collateral.

Alternative Financing Resources for Female Business Owners

There are even more alternatives out there for women entrepreneurs who are looking for more ways to boost their business’ cash flow.  If a loan isn’t right for you at the moment or if you’re simply looking to diversify cash flow sources, consider these options.

Business Credit Cards

There are several well-known financial institutions that offer credit cards tied to the credit score and creditworthiness of your business rather than you personally. Choosing the right business credit card, of course, has its own key considerations, so be sure to thoroughly research all options.

Crowdfunding

If your business has a fascinating plan for expansion or you’ve faced extraordinary hardship, you may want to consider creating a crowdfunding campaign. There are several women business owners who have found tremendous success through the help of others.

Consider the success story of Hannah Kromminga and her company Silfir. Kromminga caught the attention of the crowdfunding public because of the unique style and quality of her workwear made with sustainable materials. Because of some snappy videos and effective marketing, Silfir more than exceeded her funding goal.

And crowdfunding is a great way to get the capital your business needs while spreading the word about your business.

Grants for Women-owned Businesses

There are luckily plenty of small business grants reserved specifically for women business owners, minority-owned businesses, or female veterans. While loans will always expect repayment, grants are often obligation-free. Among the most reputable small business grants for women is the WomensNet amber grant which gives monthly small business grants to female business owners and has built an impressively active community of female business leaders.

Looking for a Business Grant?

Check Out These Grants for Women-Owned Businesses


There are several great opportunities for grant-based funding specifically set asidefor women small business owners. Find one that’s right for your business.


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Small Business Financing and Becoming a Certified Woman-Owned Small Business (WOSB)

To take advantage of programs like the SBA and to improve your odds of qualifying and getting approved for small business financing, becoming a certified WOSB is essential. Becoming a WOSB also provides access to education programs and can help extend your professional and support networks.

To become a certified WOSB, you need to meet specific eligibility criteria outlined by the SBA. Here are the key requirements:

  • Your business must be at least 51% owned and controlled by one or more women.
  • Your business must qualify as a small business according to the SBA’s size standards for your specific industry.
  • Size standards are based on factors like average annual receipts or number of employees.
  • The woman or women owning and controlling the business must be responsible for the day-to-day management and operations of the business.

You’ll also need to provide various documents to support your application, including:

  • Articles of incorporation or organization
  • Business tax returns
  • Personal tax returns of the woman business owners
  • Operating agreements or bylaws

Finally, before applying for WOSB certification, your business must be registered in the System for Award Management (SAM) database.

Choosing the Right Loans for Your Business

Considering the world of lending options available for women-owned businesses, it is essential to weigh the value – along with the cons – of each financing option available to determine which is best for your current business needs.

It is no small thing being a female business owner. In fact, each small business success from women today further opens doors for future generations of women business owners. So, don’t give up.  Keep learning.  Keep doing.  Keep growing.  Keep succeeding!


Business Loans for Women FAQs

Brandon Wyson

Brandon Wyson

Content Writer
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Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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Small Business Loan Application Checklist

Manage Your Money
by Vince Calio11 minutes / August 15, 2023
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Business Loan Documents Checklist

Applying for a small business loan can be a tricky process, as there are several requirements you need to meet in order to obtain one. Those requirements can be confusing, as lenders require everything from business licenses and cash flow history to business plans and personal financial statements. 

Whether you are applying for a business loan from a traditional bank, alternative lender, or credit union,  as a small business owner in need of financing, one of the ways you can untangle the process is to use the following small business loan checklist.  This checklist will help to ensure that you are ready to apply with confidence. Knowing what documents are needed for a business loan ahead of time will keep you organized and possibly help you get a reasonable interest rate on your loan. 

Things to Consider Before Applying for a Business Loan

Before even beginning to collect your business loan paperwork,  there are key factors you should consider:

Why do I need a loan?

This is perhaps the most important question you should ask yourself before applying for a small business loan. Getting a business loan just to have the money you borrowed sit around while you pay interest on it is obviously a bad idea. 

  • Ideally, the proceeds of a business loan should be used towards growing your business so that it can increase its revenue. For example, if you need money to develop and market a new product; purchase or upgrade equipment; expand your business by hiring new employees; or adding to your inventory would all be ideal reasons to obtain a loan. 
  • There are also financing products, such as working capital loans and business lines of credit, that can help your business operate during the offseason or when there’s a downturn in the economy. 

Can I afford a loan?

Everyone knows that loans carry interest rates, and those rates are, in part, affected by the current interest rate environment. The Federal Reserve has raised interest rates 10 times in the past year-and-a-half, and that’s going to make the interest rate on virtually every type of business loan you want to take out more expensive. If you can afford to wait, you might want to hold off on getting a business loan until rates drop again. 

What type of lender suits me best?

There are several types of lenders who can provide you with a small business loan. Those include traditional banks, alternative lenders, trade unions, marketplaces, and brokers. Each one comes with pros and cons that you should consider carefully. Some lenders, such as traditional banks and alternative lenders, offer financing products directly, while brokers typically offer you a marketplace of lenders. Also, some will demand higher business and personal credit scores than others, and some can deliver your funds more quickly than others. Carefully consider which one best serves your needs.

Can I get a grant instead?

There are, of course, several public and private business grants available to small businesses – some of which are backed by the US SBA. These grants often have specific criteria for applying. For example, some may be offered to small businesses in certain industries, and others may be offered only to women- and minority-owned businesses. Determine whether you qualify, but remember, applying for these can be a roll of the dice and you’re not guaranteed to win a grant. 

Do I have a plan B?

All small business owners have the best of intentions when applying for a business loan, but life happens, and sometimes it won’t go your way. Before you take out a loan, it’s a good idea to make a contingency plan if things go south and you find yourself struggling to keep up with debt payments. Bankruptcy should be a last resort. Do you have assets you can sell? Do you have a cash reserve that you can draw upon until you get back on your feet? 

Small Business Loan Documents Checklist

Go over this business loan documents list to make sure you are prepared for the sometimes overwhelming process of applying for a business loan. Doing so will simplify and hasten the process of getting the funding you need for your small business. 

Check your credit scores  

All lenders will pull both your personal and business credit reports. You can check your personal FICO scores online for free at the websites of the three main credit bureaus, Transunion, Experian and Equifax. You may have to pay a fee to get detailed reports so that you can check for errors. You can check your business credit score at the website of Dun & Bradstreet, the business credit bureau that is most heavily favored by lenders, for a small fee. 

If your personal FICO and business credit scores are less-than-stellar, you may want to consider taking 6-9 months to improve them so that you can increase your chances of being approved and get a better rate on your loan.

Prove that your business exists

All lenders will require documentation proving that your small business is registered as a tax entity. At the very least they will require your employee identification number, which is issued by the IRS, and proof that your business is registered as a LLC, “Doing Business As” (DBA) company, or an S or C corporation. Lenders will also require proof of identity, pay stubs, and your social security number as well. For an SBA 7a loan or a term loan from a traditional bank, the lists of documents required can be even longer and include items such as business licenses, business lease agreements, proof of equity injection and franchise, and licensing agreements if you plan to franchise your business.

Have a business plan

If you plan to apply for a term loan with a traditional bank or for a SBA 7a loan, chances are you will need to show your business plan. This is a plan that shows how your business is organized and typically includes a market analysis and what niche your products and services fill, how they differ from your competitors, and why you believe your small business will be successful going forward. In short, it details why you believe your business is going to make money.

Financial Statements

Almost all types of lenders will want to see your business’s financial documents that indicate it has a strong cash flow history, including, but not limited to 3-6 months’ worth of business bank statements, 2-3 years of tax returns, balance sheet statements and income statements. 

Run a cash flow analysis

Cash flow is one of the primary indicators that lenders use to understand the health of your business. Being able to show 3 to 6 months of positive cash flow can increase your chances of approval. It can even get you better financing terms for your small business loan. 

Collect your business bank statements 

Your business accounts are another good indicator of your company’s financial health. Generally, lenders want to see a positive daily balance on your bank statements for the past 3 to 6 months. 

Gather  supporting documents for unusually large deposits

Unusually large deposits can act as a red flag for lenders. While the  presence of these deposits can delay finalization of loans, they are not necessarily bad. Many businesses understandably have large swings in deposits and credits to their account. If your business is like that, you can expedite your loan application process gathering copies of your account receivables and future contracts to support these large deposits.

Take care of delinquencies

Many lenders only want to lend to people whom they believe are of high character. This is especially true when you’re applying for SBA loans. As such, if you have any tax liens or are late on child support payments, you should take the necessary steps to clear those up before you apply. 

Resolve any open tax liens

Unresolved open tax liens can hurt your ability to obtain financing. If possible, try to get a payment plan set up on any open tax liens you may have before you apply for a loan. A payment plan on a tax lien, along with a very strong positive cash flow will typically be considered by alternative lenders and even some SBA lenders for loan approval 

Assess any collateral you may have

Before you apply for a loan package, you may want to sit down with a business loan specialist or an accountant to see if you need to put up collateral. This includes real estate, investment holdings, savings and even your car or valuable pieces of equipment you may own. Traditional banks often want collateral if your business credit or personal FICO score is shaky. In rare cases, alternative lenders may ask for collateral. Even if you have good credit, it might be worth applying for a secured bank loan or business line of credit because you may be able to notch a lower interest rate and a higher credit line or loan amount if you put up collateral. 

Get trade references

If your business credit score is borderline, you can boost it by getting positive references from either your suppliers or, if you lease a physical space, your landlord. You can give these references to your credit bureaus and, if you’re using a traditional bank, to the loan officer. Having these could mean the difference between obtaining a loan or getting rejected. 

If you get Rejected

Getting rejected for a business loan isn’t pleasant, but it can be a valuable lesson on how to get accepted the next time you apply. Traditional banks and alternative lenders want to grant you a loan approval because it’s the way they make money. As such, they will be happy to give you a detailed explanation for why you were denied, and, usually, it will take a bit of time to improve your business to the point where you can obtain that business loan.

While every rejection is different, some of the most common reasons for getting rejected for a business loan are:

Your business credit score is not high enough

Some of the ways you can raise your business credit score include:

  •  reducing the number of creditors you owe money to
  • making sure you make debt payments on time for at least 6-9 months
  • having a strong credit mix. 

Other steps include being in good standing with your suppliers and increasing the assets of your business. 

Insufficient time in business 

Traditional banks typically won’t lend to a small business that hasn’t existed for at least three years, while alternative lenders may want to see at least two years in business. If this is the case, hold off on borrowing until your small business has been in operation for a sufficient time. If you can’t wait, see if you qualify for an SBA CDC/504 or SBA microloan, both of which only require 6 months in business. 

Too much existing debt

This is actually a common reason why small businesses get turned down for a loan. If you already have outstanding loans, you can always try to retire them with a new loan. Additionally, if you have a line of credit that is close to being fully drawn, you should take steps to pay it down before applying for a new loan. 

Your cash flow is not strong enough

If your small business’s cash flow is tight (meaning you are spending almost as much money as you are taking in), take steps to fix it by finding ways to reduce your expenditures. 

Your industry is too risky

If your small business operates in an industry in which there are higher than average bankruptcies, or if it operates in what lenders may consider “vice” industries such as gambling, alcohol, or legal marijuana dispensaries, you will most likely get turned down no matter how financially strong your business is. A quick Google search, however, can most likely lead you to legitimate online lenders who specialize in lending to companies in your industry.

Don’t Get Frustrated

Remember, when applying for a business loan, patience and weighing the pros and cons of different lenders are often the keys to getting the funding that you need to help your business grow. Go down the checklist of items that you need to take care of in order to be ready to apply, and carefully consider the pros and cons of the different types of lenders out there so that you can get the financing that is exactly right for your business. 

Vince Calio

Vince Calio

Content Writer
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Vince Calio has been a writer for Kapitus since 2021. Before that, he spent three years operating a dry-cleaning store in Rahway, NJ that he inherited before selling the business, so he’s familiar with the challenges of operating a small business. Prior to that, Vince spent 14 years as both a financial journalist and content writer, most notably with Institutional Investor News and Crain Communications.

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