June 2024 – Test Env1

What is the Difference Between Interest Rate and APR?

by Vince Calio8 minutes / June 26, 2024

When applying for a loan or any type of business financing, it’s essential for borrowers to understand the components that impact their repayment. Terms like interest rate and APR (annual percentage rate) are often used interchangeably, but they aren’t the same. Knowing the difference can help borrowers make more informed decisions when comparing loan offers.

What is an Interest Rate?

The interest rate is the cost of borrowing money, expressed as a percentage of the principal loan amount. When you borrow money, the lender charges interest as a fee for the use of their funds. Interest is typically calculated annually, although it may be compounded more frequently, such as monthly or daily, depending on the financing type. Lenders may charge you simple interest or compound interest based on the loan or financing you choose. While simple interest is a percentage of the principal, compound interest is calculated on the principal plus any accumulated interest.

When you borrow money, you’ll almost always pay interest on the sum you borrow. This applies to all sorts of loans, from business loans and lines of credit to mortgages and personal loans.

How do Interest Rates Work?

Interest rates are influenced by a variety of factors, including the level of risk associated with the loan, the current state of the economy, and the Federal Funds Rate. In general, interest rates tend to rise when the economy is growing and inflation is high, and they fall when the economy is slowing and inflation is low.

Borrowers don’t have control over these factors and their role in determining the interest rate a lender offers. However, lenders also consider your business finances when assessing creditworthiness, which can impact interest rates offered to you. Lenders typically evaluate your credit score (both personal and business) and revenue when determining the interest rate you’ll pay. Other factors, such as choosing a secured or unsecured loan, can impact on interest rates.

Interest rates tend to vary from one lender to the next, this is why it’s useful to compare rates and terms from different lenders before getting a business loan or credit card.

What is APR?

APR is the total cost of borrowing money for a given year not considering compound interest, expressed as an annual percentage. APR includes interest as well as other fees and charges associated with borrowing. While interest tells you the cost of borrowing, APR often gives you a more complete picture of the cumulative costs involved in taking out a business loan or line of credit. APR is never less than the interest rate, but APR and interest may be the same for lenders who don’t charge any fees in addition to interest.

All lenders are required to disclose the APR they charge borrowers. This is important for borrowers to note since APRs are almost always higher than interest rates, so many lenders use interest rates in advertising materials. As with interest, businesses with excellent credit and strong revenue can usually secure lower APRs.

Difference Between Interest Rate and APR

It’s important for borrowers to be familiar with both APR and interest rates when choosing a business loan or other financial product. But keep these important distinctions in mind when you’re reviewing these rates.

Costs included: Your interest rate is the cost you pay for borrowing from a lender. On the other hand, APR includes not only the cost of borrowing, but also any other fees associated with the loan.
Impact on monthly payments: Lower interest rates usually mean lower monthly payments on a loan. But the overall loan may still be expensive due to fees and charges you may not have considered. A low APR can indicate a cheaper loan even if monthly payments seem relatively high when compared to interest rates. Also, keep in mind that the annual percentage yield (APY) accounts for compound interest, a factor that APR does not account for.
Role of credit: Great credit often means lower interest rates. However, even with a high credit score your APR may appear high as it includes fees and charges that aren’t typically impacted by your credit. Good credit may grant you a relatively lower APR compared to someone with a lower credit score, but a high APR may be a sign of large fees that inflate the overall cost of borrowing.
Utility: Ultimately, the bottom line for borrowers is that interest is not as useful as APR as a measure of the cost of a loan. It’s a good idea to review APRs instead of interest rates when comparing different loans and their terms.

Keep in mind that not all forms of business financing have an APR, making it difficult to compare options. If you’re looking at a form of financing that doesn’t utilize APR, like revenue-based financing, it’s important to take all costs into consideration.

How are Interest Rates Calculated?

Simple interest and compound interest are calculated differently. Here’s how it’s calculated.

Simple interest is calculated using the formula: Simple Interest = P × r × t

Where P is the principal amount (the initial amount of money borrowed), r is the annual interest rate (expressed as a decimal value), and t is the time the money is borrowed for, in years.

For example, let’s say you borrow $10,000 at an annual interest rate of 5% for 3 years. Your principal (P) would be $10,000, your rate of interest (r) would be 0.05, and your loan time (t) is 3 years.

Using the simple interest formula of 10,000 × 0.05 × 3, you would pay $1,500 in interest.

Most credit cards and some lines of credit will charge compound interest instead. Here’s the formula that shows how it’s calculated:

Compound Interest = [P (1 + r)n] – P

Where P is the principal amount (the initial amount of money, r is the annual interest rate (as a decimal) and n is the loan period in years.

If you borrow $10,000 at an annual interest rate of 5% for 3 years, your principal (P) would be $10,000, rate of interest (r) would be 0.05 and loan term (n) would be 3 years.

CI = 10,000 × (1+0.05)3 − 10,000

CI =$1,576.25

You can see how compounding interest is higher than simple interest for the same amounts, interest rate and loan term.

How is APR Calculated?

APR is calculated by taking the total cost of borrowing money, including interest and fees, and expressing it as an annual percentage. To find your APR, you’ll need to know your periodic interest rate first.

Periodic Interest Rate = [(Interest amount + Total Fees) / Loan Principal] / Number of Days in Loan Term

Once you know your Periodic interest rate, multiply the figure by 365 and then by 100 to arrive at a percentage value. This formula requires you to know the interest you pay as a dollar amount, so you’ll need to calculate that beforehand using the formula for simple or compound interest (based on your loan).

Here’s an example. If you’ve borrowed $10,000 and expect to pay around $1500 in interest and $200 in fees over a loan period of a year (365 days), your equation will look like this:

Periodic Interest Rate = [(1500 + 200)/10,000]/365

Periodic Interest rate = 0.0004657

To arrive at your APR, multiply your periodic interest rate by 365 and then by 100 to get a percentage.

Annual Percentage Rate (APR) = (Periodic Interest Rate x 365 Days) x 100

APR = (0.0004657 x 365) x 100

APR = 16.99 which can be rounded off to 17%

By understanding how to calculate APRs and what they entail, you can make more informed decisions when comparing types of financing.

The Importance of Understanding APR

Understanding how APR works can be critical when comparing different business loans and lenders. While the interest rate is also important, APR presents the total cost of the loan minus compound interest each year. Always compare APRs on loans and lines of credit when shopping for business financing.

Interest Rate and APR FAQs

Which is more important, interest rate or APR?

APR is more important than the interest rate when you’re evaluating the total cost of your loan. That said, the interest rate provides useful information, too. A significant difference between APR and interest may indicate high fees associated with the loan. However, a high interest rate paired with proportionally high APR may be a sign that you’re not eligible for favorable rates.

Do you pay both APR and interest rate?

APR includes interest so borrowers do pay both. In practice, borrowers pay interest every month as they make payments on their loan, but they may pay additional fees at the time of taking on the loan.

Why is APR so much higher than the interest rate?

APR is often higher than the interest rate because it includes not only the cost of borrowing the principal amount but also any additional fees or charges associated with the loan, such as origination fees, closing costs, etc. However, when your loan carries no additional fees, your APR and interest may be the same.

Vince Calio

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Secured Business Loans: What to Know

Financing, Manage Your Money

by Brandon Wyson8 minutes / June 25, 2024

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

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How to Build Business Credit in 7 Steps

Credit, Manage Your Money

by Vince Calio8 minutes / June 24, 2024

For small businesses looking to grow, getting access to the right financing is crucial. Having good business credit makes it easier to qualify for loans and other forms of financing so you can easily access the funds you need to manage emergencies, consolidate debt, pay employees, or invest in new equipment. Building and maintaining strong business credit can take time, but the benefits are well worth the effort. This article covers the steps you can take to build strong business credit and grow your business.

How Business Credit Works

Just as your personal credit score represents your creditworthiness based on how responsibly you use loans and credit cards, manage debt, and make payments, your business credit score involves the same considerations for business accounts. Credit bureaus collect information from creditors and other sources and use it to calculate your business credit score. This score, which typically ranges from 0 to 100, helps lenders assess your business’s creditworthiness and determine whether to approve your business loan application.

Your business lenders report your payments and account information to business credit bureaus like Dun & Bradstreet, Equifax, and Experian. Each bureau produces a credit report and uses a scoring model to assign you a credit score based on your ability to manage debt effectively.

These credit bureaus make your business credit score and report available to lenders who use the information to assess your creditworthiness for a loan or similar financial product.

Business Credit vs Personal Credit

While business credit and personal credit are similar in many ways, there are some key differences worth noting.

Identification numbers: Business credit is tied to your business’s Employer Identification Number (EIN), while personal credit is tied to your Social Security Number (SSN).
Score ranges: While personal credit scores typically range from 300 to 850, business credit scores range from 0 to 100.
Contributing factors: Factors like your payment history (to creditors), the age of your oldest credit account, and credit utilization are important contributors to business and personal credit. Scoring models for business credit may also consider the age and size of the company, industry risks, and established trade lines.
Access to credit reports: Consumer credit reports are accessible to the subject of the report, as well as to lenders, landlords, and other parties providing services to the individual. However, business credit reports are public, and anyone can request access to them.
Lender preferences: Lenders may vary in their approach to credit review based on factors such as the age of your business and established credit lines. If you already have business credit accounts and have built business credit, your personal credit may not matter as much. However, for newer business owners, your personal credit will usually determine your creditworthiness. Some business lenders may consider both personal and business credit as part of their evaluation process.

Why Build Business Credit?

While some business owners can get by on the strength of their personal credit, there are good reasons to work on building business credit. You don’t want upheaval in your personal finances to affect your business growth and financing prospects. Additionally, there are some benefits to having a good business credit score, including:

More financing options: Good business credit can make it easier to qualify for a variety of financing options, including loans, lines of credit, and business credit cards.
Lower interest rates: With good business credit, you may qualify for lower interest rates on loans and other forms of financing, saving your business money over time.
Higher rate of approval: Lenders are more likely to approve loan applications from businesses with good credit histories.
Prepare for future growth: Building business credit takes time, so it’s important to start early, even if you don’t currently need financing. Establishing good credit now will make it easier to access funds when your business is ready to grow.

7 Steps to Build Business Credit

Building business credit can take time, but the rewards are significant. Once you establish a line of credit for your business, it’s a simple matter of making timely payments and ensuring that you borrow only what you can repay. Get started with these steps.

1. Register Your Business

Register your business with the appropriate state and local authorities. This will establish your business as a separate legal entity and make it easier to build credit in your business’s name. At this time, you should also make sure you have an EIN; if you don’t you can apply for one through IRS.

2. Open a Business Bank Account

Open a business bank account to separate your business and personal finances. This will help you keep track of your business’s income and expenses and make it easier to establish credit with vendors and lenders.

3. Apply for DUNS

A Dun & Bradstreet DUNS Number (short for Data Universal Numbering System) is a nine-digit unique identifier for businesses. While you don’t always need a DUNS number to own or operate a business, you may be asked for one when you apply for a business loan or credit. You can get a DUNS number for free through a simple application process on dnb.com.

4. Establish Trade Credit

Working with vendors or suppliers offers you the opportunity to establish a trade line where you make payments days or weeks after you’ve received your products. Trade credit can help improve your business credit score if your vendors report payments to credit bureaus.

You can build a trade line with any vendor, from your stationery supplier to any manufacturer that you purchase from.

5. Open a Business Credit Card

A business credit card can be an easy way to help build credit for your business. You don’t always need established business credit to get a credit card; instead, issuers can use your personal credit to evaluate your creditworthiness. Make timely payments and keep your credit utilization low to start building a good credit score.

6. Apply for Business Financing

Obtaining a small business loan or line of credit can help further establish your business’s credit history. Be sure to choose a lender that reports your payment history to the major credit bureaus. Once you’ve received your loan, it’s important to make payments in full and on time to ensure your payment history remains positive.

7. Monitor Your Credit with Bureaus

Regularly monitor your business credit reports with the major credit bureaus, including Dun & Bradstreet, Experian, and Equifax. Check your reports for errors and dispute any inaccuracies that could be hurting your credit score.

Tips to Maintain Good Business Credit

After building good business credit, small business owners should take steps to maintain their solid credit score. Here are tips to maintain a healthy business credit score.

Continue a Positive Payment History

Continuing to consistently make on-time payments to your loan, credit card, or other form of financing helps establish a positive payment history. Your payment history is an important factor in your business credit score, so maintaining a positive record can help improve your business credit.

Build Solid Connections with Vendors and Suppliers

Timely payments and strong communication with vendor sand suppliers can lead to positive reporting to credit bureaus, further improving your business credit profile. In addition, better connections could lead to more favorable trade terms.

Diversify Your Business Credit Mix

Having a diverse mix of credit accounts, such as trade credit, business loans, and business credit cards, can demonstrate your ability to manage various types of credit responsibly. This mix of account types can contribute positively to your business credit score.

Maintain a Low Credit Utilization

Aim to keep your credit utilization ratio low, using no more than 30% of your available credit across all of your accounts. A high credit utilization can indicate financial strain and may negatively impact your credit score.

FAQs for Building Business Credit

How do I get credit for my new business?

To get credit for your new business, you’ll need to establish a positive credit history. Start by registering your business, opening a business bank account, and applying for a DUNS number. Then, establish trade credit with vendors and suppliers, open a business credit card, and apply for business financing. Applying for a business credit card is an easy first step since issuers will likely evaluate your application based on your personal credit.

How soon can I build business credit?

You can start building business credit as soon as you register your business and open a business bank account. However, it’s difficult to say how long it will take to achieve a good credit score. The most important thing is to keep business debt under control and ensure that your lenders are reporting your payments accurately and on time.

How do you build business credit fast?

Building business credit takes time. Making timely payments and keeping a low credit utilization ratio can help you build the foundation for a good credit score, but there’s no quick fix to significantly accelerate the process. One key aspect of quickly achieving good credit is keeping negative marks off your credit report. Late payments, defaults, bankruptcy, etc., can decimate your progress and be tough to recover from. Avoiding these financial pitfalls, managing debt responsibly, and tracking your credit reports for any mistakes can all go a long way toward building good business credit.

Vince Calio

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How to Get an Unsecured Business Loan

Financing, Manage Your Money

by Brandon Wyson9 minutes / June 23, 2024

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 Loan	Secured Loan
Collateral not required	Collateral is essential
Potentially higher interest rates	Collateral allows for lower interest rates
Ideal for borrowers with good credit	Suitable for all borrowers, including those with lower credit or a short credit history
Borrowing limits may be lower due to higher risk	Less 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

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Should I Get a Business Loan or Line of Credit?

Financing, Manage Your Money

by Brandon Wyson11 minutes / June 17, 2024

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

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2024 Small Business Grants, The Ultimate List

Financing, Manage Your Money

by Bernadette Abel9 minutes / June 11, 2024

2024 has been and continues to be a great year for small business grant opportunities. But with the incredible number of grants available throughout the year, it could be a full-time job in itself to seek out each and every grant your business is eligible for. Consult this master list of grants available for small businesses in 2024 from the all-entry level down to several major groups like women and veteran small business owners.

You can use this definitive list as a guide to help you build your own list of high-quality small business grants to apply to throughout the year.

2024 Private Grants for Small Businesses

From mainstays like the FedEx Small Business Contest or NASE grants to newcomers like the Kapitus Building Resilient Businesses Contest and Skip Monthly, this list is the best place to start your grant search. Each grant on this list is open to small business owners nationally. This list also has grants from Q1 through the rest of the year, so be certain to bookmark this page and check back regularly.
MORE >>

Visa Everywhere Initiative

Quick Information:

For small businesses in the payment and fintech industry
Special edition categories for black-owned, women-owned, and LGBTQ+-owned startups
Check the Visa Everywhere Initiative website for updated information

Venmo Small Business Grants

Quick Information:

Small businesses must have 10 or fewer employees and $50,000 or less in annual sales
20 small businesses awarded each year
Visit Venmo’s small business grant site to apply

National Association for the Self-Employed (NASE) Small Grants Program

Quick Information:

10 recipients awarded $4,000 for growth financing
Must be a member of NASE
Small businesses should check NASE’s grants website for updated information.

Small Business Growth Fund

Quick Information:

Offered by Hello Alice and Progressive
Must sign up to Hello Alice
Grant amounts will vary between $5,000 and $25,000
Visit Hello Alice’s website to apply.

Skip Monthly Business Grant

Quick Information:

Must have a US SBA-eligible small business
$1,000 grants awarded each month
Detailed instructions on how to apply can be found on Skip’s website.

Small Business Digital Ready Program

Quick Information:

Open to all small businesses that sign up for the online course
$10,000 award amounts
The sign-up sheet for the course can be found on National Ace’s website.

US Chamber of Commerce Dream Big Award

Quick Information:

Must be a for-profit small business in the US
Categories for women-owned, veteran-owned, and minority-owned small businesses
Applicants can sign up for CO’s newsletter here to get updates

Fast Break for Small Businesses

Quick Information:

Offered by the NBA, WNBA, NBA G League, and LegalZoom
$6 million in grants and legal services awarded
Those wishing to participate can sign up for email alerts.

Barclays Small Business Big Wins Contest

Quick Information:

60 small businesses win $255,000 in awards
Applicants must submit their business’s story and photographs of their business
Check back regularly to stay updated on key dates and deadlines

FedEx Small Business Grant Contest

Quick Information:

Awarded by FedEx
10 winners each receive $30,000
Information on the new round of the contest can be found here

2024 Government Grants for Small Businesses

Applying for a grant directly from the government is a bit more of an undertaking compared to applying for private grants. Consider this list the best how-to for both finding out if your business is the right fit for a government grant and how to apply for lengthy grants offered directly from departments of the federal, state, or local government.
MORE >> Guide to Government Grants for Small Businesses

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBIT)

Quick Information:

Grants are awarded through 11 federal partner agencies such as the Dept. of Agriculture, Dept. of Commerce and the Dept. of Defense
Three-phase application process
For more information on the SBIR and SBTT programs and to apply, review the SBIR website.

USDA Rural Business Development Grants Program

Quick Information:

Awarded by the US Department of Agriculture
Applicants must fit specific usage categories and be located in a rural area as defined by the USDA
Check out the USDA’s website for more information

US Economic Development Administration (EDA) Small Business Grants

Quick Information:

Grants awarded by the EDA monthly
EDA also awards generous tax benefits
Check out the US EDA’s website where you can find monthly national grant opportunities

State Trade Expansion Program (STEP)

Quick Information:

Over $200 million awarded since 2011
Grants are awarded through state and local affiliate offices
Visit the SBA’s website on the STEP program for more information

2024 Grants for Women-Owned Small Businesses

2024 is a banner year for grants for women small business owners. This great collection of grants and resources hosts grants seeking strong and independent women small business owners. With the number of women small business owners also on the rise, the completion of these grants has never been hotter. Get your pitches and business plans together ASAP, and regard this list for up-to-date info on these grants.
MORE >> 9 Best Small Business Grants for Women

SoGal Black Founder Startup Grant

Quick Information:

Applicants must self-identify as a Black woman and be a business owner
Awards range from $5,000 to $10,000
Visit the SoGal website to apply

WomensNet Amber Grant for Women

Quick Information:

Awards offered at the end of each month and year
Awards range from $10,000 per month to $25,000 per year
Visit the WomenNet Amber Grant site to apply

digitalundivided BREAKTHROUGH Program

Quick Information:

Applicants must identify as women and member of the BIPOC and/or Latina community
Must generate at least $50,000 annually in revenue
Apply for the grant from the digitalundivided grant page

Tory Burch Fellows Program

Quick Information:

Must be 21 years old and be a woman with at least 51% ownership in a small business
$5,000 awards
Apply from the Tory Burch webpage

IFundWomen Grants Series

Quick Information:

Applicants can apply for more than one IFundWomen grant at a time
Awards range from $5,000 to $10,000
Review the collection of IFW grants at their website

Fearless Fund Strivers Grant Program

Quick Information:

Grants awarded monthly to Black women business owners
Applicants must have an annual revenue of less than $3,000,000
Apply for the grant from the Fearless Fund’s application page

Women Founders Network Fast Pitch Competition

Quick Information:

Applicants must fill out a 23-question questionnaire
Awards range from $5,000 to $25,000
Business owners can apply for selection for the in-person pitch competition from this link

Boston Women’s Fund

Quick Information:

Must be a women-owned business in the Greater Boston area
Award amounts vary based on need
Apply via the Boston Women’s Fund site

The Girlboss Foundation

Quick Information:

Applicants must be women small business owners operating in the industries of fashion, design, music, or the arts
Grant winners receive $15,000
When applications go live, you can apply directly from the Girlboss Foundation website

2024 Grants for Minority-Owned Small Businesses

There is an inspiring number of grants built to both celebrate and expand minority-owned small business owners, and 2024 has certainly delivered a demanding list of grants. 2024 is also the year of newcomer grants, so even if you think you know the best grant opportunities this year, check this list first.
MORE >> 7 Grants for Minority-Owned Small Businesses

Main Street America’s Backing Small Businesses Grant Program

Quick Information:

Available to minority-owned, women-owned, and veteran-owned small businesses
350 small businesses are awarded $5,000, plus $25,000 to 25 winners
Click here for information about the program as well as an application form.

Coalition to Back Black Businesses Grant Program

Quick Information:

Must be a Black-owned business with 3-20 employees and operating in an underserved area
Award amounts range from $5,000 to $25,000
Check the Coalition’s website for updated information

Southern Restaurants for Racial Justice (SRRJ)

Quick Information:

Awarded to black-owned small businesses in the food industry operating in the South
60 restaurants won $20,000 grants in 2022
Keep checking SRRJ’s website for updates

Lenovo Evolve Small Initiative

Quick Information:

Applicants must be woman-owned or minority-owned small businesses in the US or Canada
10 winners are awarded $5,000 each year
Visit the Lenovo Evolve Small website for updated information

Comcast Rise

Quick Information:

Must be at least 51% owned by a minority, including Latinx, African American, Asian American, Pacific Islander, or other people of color.
500 small businesses awarded $10,000 in 2022
Check the Comcast Rise website for updates

The Boss Network and Sage’s Invest in Progress Grant

Quick Information:

Applicants must be Black women entrepreneurs
Winners selected based on their stories and planned funds use
Applications can be found on Hello Alice’s Website

The Minority Business Development Agency (MBDA) Grant Program

The MBDA is a federal agency that funds grants of all sizes to minority-owned small businesses. The grants are administered by MBDA’s business centers in various states. Interested business owners can apply for the grant by visiting www.grants.gov. Obtaining a MBDA grant involves extensive paperwork and registering your business with the MBDA.

Quick Information:

Businesses must be minority-owned and registered with the MBDA
Grant sizes vary
Apply via the MBDA website

2024 Grants for Veteran Small Businesses

Grants for veterans are one of the best ways to give back to the men and women who have served our country. These grants reward continued service instead of at our borders but in our cities and towns. Several of the grants on this list are offered by veteran collectives that pride themselves on supportive and understanding environments for veterans. With education and mentorship opportunities , this list is one of the best ways for veteran business owners to get involved and get the funding they deserve.
MORE >> Top Small Business Grants for Veterans in 2024

Military Entrepreneur Challenge by Second Service Foundation

Quick Information:

Applicants must be veteran, reserve, or transitioning active-duty members of the United States Armed Services of at least 21 years of age
Awards range from $4,000 to $15,000
Apply via the Second Service Foundation website

Warrior Rising Vetrepreneur Program

Quick Information:

Applicants must be US Armed services, current or veteran, or a spouse or close family member of a veteran
Awards vary based on need
Apply to join the Warrior Rising Community here

U.S. Chamber of Commerce Dream Big Awards

Quick Information:

Applicants must be a majority owner in a for-profit business with fewer than 250 employees
• Awards are $25,000
• Apply for the veteran grant through the main Big Dreams portal

Bernadette Abel

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What is a Business Line of Credit?

Financing, Manage Your Money

by Brandon Wyson10 minutes / June 10, 2024

Running a small business means being flexible and adapting to change faster than the competition. Every small business owner knows the value of cash flow but are you taking full advantage of what credit, or more specifically, a business line of credit can do for you and your team? Let’s talk through the key points of what a business line of credit is and what you can expect after opening one for your business.

How Does a Business Line of Credit Work?

A business line of credit for small business is functionally an amount of money that you can spend, repay, and redraw for the length of your agreement with whatever financial institution you opened the line with. As you spend money in your line of credit, that money counts against your overall line limit. As you repay that money, you can then spend it again as long as your line stays open.

The small business that opens a line of credit is only responsible for paying interest on the balance that remains at the end of a billing period. So, this means that if you fully pay off your business line of credit before the end of each billing period (generally monthly), you will not pay interest on your line.

Where to Get a Business Line of Credit

Business lines of credit are available from a wide range of financial institutions ranging from larger national banks all the way to small online lenders. Let’s talk about the difference between what you can expect from a line of credit at a larger institution versus an online lender.

Banks and Major Financial Institutions: If you are looking to open a business line of credit with a bank or credit union, you can expect generally steep requirements for your credit history, business credit score, your annual revenue, and your overall business history. Many major institutions will also ask for some kind of collateral when opening your line. If an institution requires collateral, it means they are offering secured lines of credit, but we’ll get into that later.
Online Lenders: There is an almost uncountable number of online lenders active today, so it is impossible to speak for all of them, but you can expect some lighter credit requirements and maybe even opportunities for start-ups, something almost impossible to find at major banks. Of course, in exchange for a higher risk line, your interest rate will likely be higher to account for it. It is also likely that most online lenders offer a quicker application process compared to major institutions.

How to Get a Business Line of Credit

While every business ought to have their own process, here are our four recommendations for connecting your business with a line of credit in a smart and comprehensive way.

1. Decide How You Will Use Your Business Line of Credit

While it’s true that a business line of credit won’t accrue interest when it goes unused, that doesn’t mean that your business should open one simply to have one. Think about the potential situations where you may use your line. For example, would your line of credit ever be used to cover payroll?

Or maybe for inventory? Or do you want to use your line for emergencies and unexpected expenses only? No matter what your answer is, your next step is to determine the most money that you could ever require for any of those use cases. The figure you come up with likely represents the credit limit you should look for in your line of credit.

2. Review Your Current Financial Portrait

Just about every lender is going to want to get a good picture of your recent financial history as well as your business credit score. It is possible lenders may want to see your personal credit as well if you are a newer business owner or your business credit isn’t developed enough.

Your first step should be to make PDF copies of at least the last six months of your business bank statements, and a copy of your ID is helpful to have on hand as well.

3. Compare Lenders

Feel free to talk with multiple lenders and collect as much information as you think you’ll need before making your first inquiries. It doesn’t hurt to find lenders who have already funded your industry or have made strides for causes you already believe in. Choosing your lender ought to be just as involved as choosing your final offer.

4. Get Your Documents in Form and Start Applying

This is the easy part. Many online applications today are straightforward and meant to save business owners like you time.

Business Line of Credit Application Requirements

Business line of credit application requirements vary by business, but most lenders will require the following:

Business information, including type of business and ownership.
Financial statements to demonstrate proof of revenue and cash flow.
Credit history, both personal and business credit.
Proof of time in business.
A business plan to demonstrate the intended use of funds.
Collateral, if you’re applying for a secured business line of credit.

What is a Business Line of Credit Used For?

While some business owners like to use their business line of credit in predictable and repeatable ways like covering payroll or inventory, there are several others who keep their line of credit clear in the case of an emergency. Since a line of credit is a re-drawable sum, any expense you expect to repeat itself may be a good fit for your line of credit as long as you are certain you can pay back the full amount before the end of the billing period. If not, you will have to pay interest on the unpaid amount.

Secured Versus Unsecured Line of Credit

A secured line of credit is a line of credit backed with some amount of collateral. This can be real estate or any asset of value that you declare would be forfeited in the event your line of credit went unpaid. An unsecured line, then, is a line of credit tied to collateral. As you may guess, secured lines of credit generally have more generous interest rates and terms while unsecured lines (because they present more risk to a lender) tend to have high interest rates. Repayment terms on an unsecured business line are also likely to be considerably less lenient, as there is much more risk on the lender’s side.

Business Line of Credit Versus a Business Credit Card

The biggest difference between a business line of credit and a business credit card is how you can use the two products. While business credit cards can be used in just about every transaction that allowscard payment, lines of credit are considerably more flexible, as they represent an amount of capital provided on behalf of a lender. It’s just about impossible to pay an invoice or payroll, for example, with a business credit card, but this is more than possible with a line of credit.

Another key difference between business lines of credit and business credit cards is that lines of credit generally have higher draw limits than business credit cards. A business line of credit amount is generally chosen based on larger and not short-term expenses like payroll or restocking inventory. A business credit card, while still likely to have a limit higher than a personal card, often isn’t suited for the same expenses that a line of credit can handle.

What to Consider Before Getting a Business Line of Credit

While a business line of credit may seem like the ideal option for your business, it can depend on the specifics of the line of credit offered. Consider rates, terms, and alternative options before taking out a line of credit.

Rates and Terms

Each lenders will offer different rates and terms for a business line of credit. While comparing lenders, pay attention to the rates and terms available to your business. It’s also worth looking at repayment terms at this time.

Line of Credit Alternatives

Aside from a line of credit, small businesses have other financing options available, including:

Term loans: Term loans come with a fixed loan amount, rate, and repayment schedule. The fixed aspects of a term loan make it an attractive option for business owners who want a lump sum loan with a consistent repayment schedule.
SBA loans: Supported by the U.S. Small Business Administration, SBA loans are guaranteed by the SBA but facilitated through a lending partner, such as a bank, credit union, or online lender. The SBA has multiple loan programs to choose from.
Equipment financing: Equipment financing lets a business take out a secured loan to purchase equipment. When the loan is paid off, the equipment become fully owned by the business.
Revenue-based financing: With revenue-based financing, small businesses can secure financing in return for a percentage of business revenue, up until the predetermined repayment amount is reached.

Business Line of Credit FAQs

Even with a good grasp of the basics of a line of credit, it is more than understandable to still have some questions. These are the most common questions when it comes to business lines of credit.

How Do You Pay Back a Business Line of Credit?

In most cases, it is possible to pay back your business line of credit in the same way you would pay back any loan or lump sum financing with a lender. While lender methods will vary, it is more than likely that lenders will give you a specific online portal for repayment.

How Do I Request a Line Increase?

It is more than likely that most lenders will determine your eligibility for a line increase in the same way that they will assess your ability to take on more financing in general. With that in mind, you may want to get in contact with your lender’s renewal department.

When deciding whether your business needs a line increase, it is important to think about both the maximum amount of money that you may need to draw in a billing period. But an equally important consideration is the highest amount of interest you are able to take on. Do some thought experiments

and talk with your lender to better understand the maximum line size that could work for your business.

Does a Business Line of Credit Help Build Business Credit?

Responsibly and consistently repaying your line of credit at the end of each billing period is a proven way to show credit responsibility. While there is no way to know for sure how much keeping good standing with your line will help your overall credit score, you’re certainly not hurting your score by doing so.

Can an LLC Open a Business Line of Credit?

Yes, LLCs can open a business line of credit as long as they meet eligibility requirements. To qualify, LLCs should make sure they have a business plan, bank statements, proof of revenue, and both business and personal credit scores ready.

Brandon Wyson

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Small Business Grants for Veterans in 2024

Financing, Manage Your Money

by Brandon Wyson10 minutes / June 9, 2024

Veterans and small business are a natural match and it’s not hard to see why. Running a small business takes personal discipline and an uncommonly strong determination. These are also two very prominent traits of the men and women who serve in the American military. Those veterans who successfully adjust from servicing our nation in the military to servicing our towns and cities as small business owners are in a way continuing their mission to protect and serve.

There are several groups who recognize the value and strength of veteran small business owners and offer grants to give back to this strong community. Learn more about what opportunities are out there for veteran small business owners seeking grant funding by studying this list.

Top Grants for Veterans

Military Entrepreneur Challenge by Second Service Foundation

The Second Service Foundation (formerly the StreetShare Foundation) is a collective that provides support and a strong community for veteran small business owners through education and grants. This year Second Service is running the Military Entrepreneurship Challenge, their newest grant opportunity for veteran small business owners with a strong business idea.

Deadline: Second Service offers multiple challenges based on your local area. Subscribe to the Second Service Foundation email listing here for regular updates.

Amount: Expected to be $15,000, $6,000, and $4,000.

Where to Apply: Application page opening date TBA

Key Requirements: Applicants must be veteran, reserve, or transitioning active-duty members of the United States Armed Services of at least 21 years of age. The veteran entrant must own at least 51% of the business they are applying on behalf of and must be “low-income and otherwise lack the financial means” to grow their business. After a video application, selected entrants must pitch their business at an in-person event where winners are selected by attendees and judges.

Application Difficulty Level: Medium to Hard

Warrior Rising Vetrepreneur Program

Warrior Rising is one of the strongest and most well-known veteran business communities in America. Over the years, their funding capacity and capacity to take in new vetrepreneurs has jumped impressively and the 2024 Warrior Academy business workshop is shaping up to be the biggest yet.

Deadline: Warrior Rising accepts Vetrepreneur applications year-round

Amount: Based on individual need.

Where to Apply: Apply to join the Warrior Rising Community here.

Key Requirements: Applicants must be a member of the US Armed Services, current or veteran, or a spouse or close family member of a veteran. After applying, Warrior Rising meets vetrepreneurs where they are, in any stage of their business. Once you are a member of the community, expect invitations to regular events and funding opportunities selected for the vetrepreneur community.

Application Difficulty Level: Easy

U.S. Chamber of Commerce CO-100 Awards

The Chamber of Commerce Co-100 awards is a national grant competition with a specific category for veteran-owned small businesses. This annual contest celebrates business owners with strong business plans and well-thought-out plans for growth.

Deadline: July 8, 2024

Amount: $25,000

Where to Apply: When applications open later this year, vets can apply for the veteran grant through the main CO-100 portal.

Key Requirements: You must create an account with The Chamber of Commerce on their specific Co-100 Awards portal. The 2024 portal is not live yet, but check this page regularly for updates. Applicants for the veteran category of the Co-100 Awards must be a veteran or transitioning active-duty member of the Armed Services. The applicant must be the majority owner of a for-profit business with less than 250 employees and a gross revenue under $20 million.

Application Difficulty Level: Medium

Grants for Veterans vs Government Grants

Grants from the government operate very differently than the grants on this list. Many of the groups on this list benefit from funding that comes from the government, and this is usually how the federal or state governments get involved with grant funding. There are, however, opportunities for small business owners to get grant funding directly from the government; learn about the best ways to be involved here.
MORE >> Government Grants for Small Businesses

Choosing the Right Grant for Your Business

As a veteran small business owner, each grant on this list is both uniquely familiar with the problems you most likely face as well as the anxieties of running your business. Each grant on this list which is run by vet groups pride themselves on short applications and long relationships meaning that it is more than possible for a vet small business owner to apply to each grant on this list with no problems.

Tips for Making the Best Grant Bid

Business grants for veterans are highly competitive, so taking every step to help your grant bid stand out could help. Here are tips to focus on to help make your bid the best it can be.

Research and Review Before Applying

Before beginning any applications, conduct a thorough review of each grant to make sure it aligns with you and your business. Aside from double checking that you meet all requirements, consider looking at past winners and see how they compare to your business. Are they community-driven small businesses? Or do most past winners come form a specific business area? Putting your time and energy into the right grants could be a key to your success.

Highlight Your Story

So many grant competitions ask their applicants to demonstrate their determination and ethics but for veteran grants, the judges and review panels likely already know applying veterans are of good character. It then makes much more sense to double down on firm, specific, and dollar direct plans for what you would do with grant money. Organization is another trait inherent to our vets.

Tell the judges how service in the military relates to service in the community as a small business. The best veteran grant bids will be the ones that authentically show your acumen for business as well as your great personality. Be yourself!

Have Someone Look Over Your Application Before Submitting

Instead of reviewing your grant application yourself, consider letting a fellow business owner, mentor, or grant professional review your application. They may be able to provide valuable feedback that strengthens your application.

Alternatives to Grants

Investors: As seen on the resources section of this list, investors and venture capitalists are attracted to veterans for their discipline and loyalty. There are several great ways to seek investor funding as a veteran. But don’t feel restricted to veteran-only investor circles; being a veteran is an incredibly visible boon to any bid for investors. You sell your character as well as your business when seeking investors.

Crowdfunding: A successful crowdfunding campaign needs a compelling story and a tangible goal. Veterans have half of those criteria just by being themselves. A veteran small business owner with a story to tell would likely do quite well on a crowdfunding campaign with the right videos and digital assets. One of the other major benefits of crowdfunding is that your business is seen and recognized by all of the people who click on your campaign.

Financing: If you have a very specific plan for how you plan on using your funding and if that plan leads to you making more capital over time, financing is a great way to expedite those plans. Taking out a loan, of course, will have repayment terms unlike a grant. So only seek out financing if you are confident your business plan can lead to easy repayment.

Additional Resources for Veteran Small Business Owners

There are a number of resources set aside specifically for veteran small business owners. While not all these resources may lead to funding, the veteran business owner community is known for a focus on education.

SBA Boots to Business

The SBA Boots to Business program is an education and mentorship program for veterans with a focus on aiding vets at every level of small business ownership. From idea to brick-and-mortar, Boots to Business is a program that works on bringing the strengths of military ethics into the business world.

Military Reservist Economic Injury Disaster Loan

The Military Reservist Economic Injury Disaster Loan is a SBA-backed loan with a 4% interest rate that any business with an essential employee who is military reserve called up to active duty can apply for to cover operating expenses. The maximum amount for the loan is $2 million.

VetFran Franchising

Vetfran is a group that works to connect veteran business owners with a large group of franchise owners looking for new franchisees. Vetfran has a great collection of big-name sponsors and opportunities specifically for their veteran members.

Service-Disabled Veteran-Owned Small Business Certification

Businesses owned by veterans who are service disabled can self-certify with the SBA as a Service-Disabled Veteran-Owned Small Business. Once certified, these businesses have access to a specific

3% of annual federal contract dollars which are set aside for certified members.

Hivers & Strivers

Hivers & Strivers Capital is a venture capital firm with the mission of getting early-stage financing to veterans. With many vet board members and a great peer to peer network, Hivers & Strivers is one of the best ways for a veteran striving to kick off their small business to get started. Further, Hivers and Strivers has extensive staffing connections and mentorship programs.

Veteran Women Igniting the Spirit of Entrepreneurship

Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) is a program hosted by the Syracuse University D’Aniello Institute for Veterans & Military Families to teach business skills to female veterans and the spouses of vets. Funded in part by the SBA, this program is renowned for its networking sphere. With regular lectures and speeches from business experts and Fortune 500 CEOs, this program is a great way to continue your business education in a friendly environment. V-WISE events are generally in person in the Syracuse area but watch the V-WISE homepage for video and teleconference events in the future.
MORE >> 9 Best Small Business Grants for Women

Business Grants for Veterans FAQs

What Can a Business Grant Be Used For?

Specifics may vary by the grant issuer, but a business grant for veterans can typically be used for development projects, growing operations, purchasing equipment or inventory, and hiring and training employees. Check the terms and conditions of the grant to verify the specific uses of the grant funds allowed.

Will My Grant Be Taxed?

In almost every case, yes. Unless otherwise stated, grant money is subject to taxation.

Is There a Downside to Applying for As Many Grants as Possible?

Especially as a veteran, there are several grant opportunities that, even if you don’t win, could lead to lasting partnerships. Veteran grant competitions are both a way to highlight great businesses and the honor of service. Apply to as many veteran grants as you have time to; you may walk out of them with a new community of veteran business owners ready to help you in a way even more valuable than capital.

Do I Have to Pay to Apply for a Grant?

No veteran grant on this list has an application fee.

Brandon Wyson

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How to Check Your Business Credit Score

Credit, Manage Your Money

by Bernadette Abel7 minutes / June 3, 2024

7 Sites to See Your Business Credit Report - and 5 of Them are Free

What’s in your business credit report? Knowing what lenders see when they’re making financing decisions about your business can help you better prepare before applying for credit.

Here are a few things to know about your business credit report. Plus, we cover seven websites that offer reports, including five where you can get a free report.

What is in a Business Credit Report?

Credit bureaus track business credit activity through your EIN (employee identification number); or, if you have one, your DUNS. number. Business credit reporting agency, Dun & Bradstreet, issues this identification number, and it’s free for businesses that have to register with the federal government to receive contracts or grants.

This information helps build your credit report, which contains details on reported past and current borrowing arrangements. These include business loans, credit lines, credit cards, and mortgages. The report may also include information on judgments, liens, and any accounts that may have gone to collections agencies. Your business credit report will also include a credit score, which generally represents how the issuing agency views your business’ ability to make payments on time and in full.

Where to Check Your Business Credit Score

Business credit reports are complied by three companies: Experian, Equifax, and Dun & Bradstreet. To get your business credit report, you need to request a report from one of these three agencies, or through a third party. When requesting your business credit report, you’ll need to provide basic information including your business name, address and contact information. Specific requirements could vary by reporting agency.

7 Business Credit Report Providers

If you’re curious about what’s in your business credit report, check out these seven providers – some of which offer reports for free!

#1. Experian

One of the better known personal credit bureaus in North America, Experian, also offers paid business credit reporting services. Experian provides a one-time business report which includes a credit summary report, credit score, and business summary for one business. Or, you can choose a monthly or annual service with the ability to check and monitor your own business credit reporting and business information in real-time. Through the service, you can also check details on other businesses, such as potential partners or customers.

#2. Equifax

Operating across the globe, Equifax offers an entire suite of business credit reporting services for businesses large and small. While they don’t currently offer a free business credit report, they do off reports for a fee. In addition, their Business Risk Monitor for Small Business service provides public record, credit, and risk score email alerts to notify customers of activities and inquiries impacting their business credit in these areas.

#3. Dun & Bradstreet

D&B Credit Insights lets you monitor changes to your Dun & Bradstreet business scores and ratings; and can notify you – either through email notifications, or via an app – when someone else requests access to your business score. They have three subscription options ranging in cost from free to $149 per month. Take note – while your Paydex score is available through all three subscription options, if you are looking to specifically access your D&B rating, you’ll need to opt for one of the paid subscriptions.

#4. Nav

Credit monitoring system, Nav, gives both individuals and businesses access to free credit summaries. Check your business report summaries from Experian and Dun & Bradstreet — you don’t even need to provide a credit card number to do so. Yet, bear in mind that these are only summaries. If you want access to more detailed business credit information, you’ll need the paid service.

#5. Data Axle

Data Axle (formerly Credit.net) provides purchases of one-off credit reports as well as two credit monitoring subscription options – a monthly plan or an annual plan. With the subscription options you receive unlimited searches and downloads of credit reports. If you opt for purchasing a single report, upon your first purchase you will receive a second report for free.

#6. CreditSafe

Here’s another online option that lets you access a free report before committing to a longer-term paid arrangement. With a CreditSafe free trial, you’ll have access to credit scores and limits, company financials, adverse credit insights and more for not only your own business, but other businesses as well. With your free trial you’ll be given access to view up to five domestic credit reports.

#7. Tillful

Tillful is on a mission to help small businesses reach their full potential by giving them free access to their credit score so owners know where they stand when it’s time to get business financing. With the Tillfull business credit reporting ecosystem, you can access your credit score and learn how it’s measured. You can also connect as many bank and business credit accounts that you want to get a holistic view of business credit. You can access this system as often as you’d like and you can even sign up for email monitoring alerts to let you know in real-time when a change has been made.

How Lenders Use a Business Credit Report

Lenders use the information in your business credit report to help inform financing decisions for credit applications from businesses. They may take into account your business credit score, payment history, length of credit history, and any derogatory or negative information.

Why You Should Check Your Business Credit Report

It’s important to review the information on your business credit report for accuracy. If you find that it is not, contact the reporting agencies to have it corrected as Incorrect information could negatively impact a number of areas of your business including the ability to secure a business loan or other business financing

Knowing what lenders will see on your report can also give you the opportunity to prepare to explain any unusual or less-than-desirable information on your business credit report. And it also gives you an idea of areas for improvement, such as paying bills on time or keeping credit card balances within limit. These steps could make it easier to qualify for business financial vehicles like a term loan or business line of credit.

Why You Should Check Your Business Credit Report with Multiple Bureaus

Business credit reporting bureaus develop calculations to measure your business credit score. However, these calculations vary from bureau to bureau, so your business credit report may be slightly different with each bureau. Checking your report with different bureaus can help you determine your business’ creditworthiness while also letting you review each report for accuracy.

Business Credit Report FAQs

How long does information stay on my business credit report?

The length of time information stays on your business credit report varies. According to Experian, trade data and leasing data can stay for up to 36 months, while negative information like judgments, tax liens and collections can last for over six years. Bankruptcies can stay on business credit reports even longer, lasting 7-10 years. The long-lasting effect of negative information o n business credit scores is one reason why regularly checking your report for errors is so important.

How accurate is a business credit report?

The accuracy of a business credit report depends on the reporting agencies and the information provided by creditors. Because mistakes and errors happen, you should regularly review your business credit report through multiple bureaus to verify the information listed is correct.

Bernadette Abel

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What is a Non-Recourse Commercial Loan

Financing, Manage Your Money

by Brandon Wyson6 minutes / June 2, 2024

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

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What is an Interest Rate?

How do Interest Rates Work?

What is APR?

Difference Between Interest Rate and APR

How are Interest Rates Calculated?

How is APR Calculated?

The Importance of Understanding APR

Interest Rate and APR FAQs

Which is more important, interest rate or APR?

Do you pay both APR and interest rate?

Why is APR so much higher than the interest rate?

Vince Calio

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What is a Secured Business Loan?

Parts of a Secured Business Loan

Secured vs Unsecured Business Loans

Why Consider a Secured Business Loan?

Benefits of Secured Business Loans

Drawbacks of Secured Business Loans

Types of Secured Business Loans

Term Loans

SBA Loans

Secured Business Loan Alternatives

Line of Credit

Invoice Factoring

Equipment Financing

Secured Business Loan Qualification Requirements

Secured Business Loan FAQs

How much collateral is needed for a secured business loan?

Is a secured business loan hard to get?

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

Brandon Wyson

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How Business Credit Works

Business Credit vs Personal Credit

Why Build Business Credit?

7 Steps to Build Business Credit

1. Register Your Business

2. Open a Business Bank Account

3. Apply for DUNS

4. Establish Trade Credit

5. Open a Business Credit Card

6. Apply for Business Financing

7. Monitor Your Credit with Bureaus

Tips to Maintain Good Business Credit

Continue a Positive Payment History

Build Solid Connections with Vendors and Suppliers

Diversify Your Business Credit Mix

Maintain a Low Credit Utilization

FAQs for Building Business Credit

How do I get credit for my new business?

How soon can I build business credit?

How do you build business credit fast?

Vince Calio

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What is an Unsecured Business Loan?

How Unsecured Business Loans Work

Parts of an Unsecured Business Loan

Unsecured Business Loan Benefits

Unsecured Business Loan Drawbacks

Secured vs Unsecured Business Loans

Who Offers Unsecured Business Loans?

4 Steps to Get an Unsecured Business Loan

Check Your Business Credit Score

Gather Required Documents

Research Options

Submit Your Application

Unsecured Business Loan Alternatives

Lines of Credit

Invoice Factoring

SBA Loans