How much money can I borrow?
The amount of allowable money borrowed is contingent on many factors. The strength of credit history, previous credit limits, income, residence status, business gross sales, and your time in business are some of the major factors that contribute to acquiring a commercial loan
Is a line of credit better than a loan?
A line of credit can be much better during the initial stages. The payments are lower and it gives the borrower more flexibility. Monthly payments on lines of credit are usually 1% to 2% of the balance. Monthly payments on a loan will vary depending on the terms lasting from 24 to 84 months.
What qualifies as a business loan?
A business loan requires a minimum of 24 months in business with an average of gross sales of $150,000 or higher. Business credit does play a role, but the overall credit of all owners is the deciding factor.
Do I need to be currently employed to get a business loan?
Though current income is one of the factors contributing to getting approved, some lenders will not require you to be currently employed. Some lenders will dedicate their focus more upon the business a person is looking to start or buy.
Do I have to put my home up for collateral as part of the financing?
If you have equity in your home, then it will be attached; but, it is not warranted for your home to be contributed for collateral. Lenders are looking for veritable cash flow and not collateral necessarily.
How much money do I have to contribute towards the purchase price?
Lenders want to see the business buyers take some risk as well; though the minimum down is usually 10% to 15%, putting down 20% is more common and desired by most lenders. Down payments can come from savings, equity from a home, retirement funds, etc.
How long does it usually take to get financing?
Approval normally takes place within a week and the funding is provided within the first month of approval.
Is cash flow or adjusted net income important?
Lenders tend to look more upon positive cash flow or adjusted net income than equity or collateral. A "positive net income" factors in the owner's salary, net income, and depreciation. Revenue and cash trends over the previous three years are highly scrutinized by lenders.