Florida Small Business Loans – How Should a Business Choose the Right Option
Starting a small business is not an easy task, and it is more difficult when you don’t have the exact capital you need. In situations like this, you will need help from lenders. The challenging part here is how you will choose the right Florida lender for your loan?
When starting a small business in Florida, you need many. Do you need a business license? A sales tax collection certificate, an EIN, and your company must be properly registered with the state division of corporations.
If you don’t have enough capital or don’t have capital at all a loan for your Florida small business might be is necessary. However, you need to consider the right lender for you as well.
Why the right lender?
Finding the right business lender for you is could be the most difficult part of starting up a business. You may need to search them online or check out ads you find appealing. When considering that many businesses are out there that can get you a loan it makes sense that finding the right one can be difficult. If going in you have a list of potential lenders you can choose from then the chances of getting a good one increases.
Questions to Ponder
Before thinking of who the right people to go to, some significant questions need to answered.
How much capital do you need?
What will be your expenses in putting up your small business?
How long are you going to pay the loan?
What is your collateral for the loan?
If you have answers to these questions, you are one step ahead as the answer to these questions will help lead you to where you really want to go.
Characteristics of responsible lenders
A good lender possesses some qualities that can help a borrower determine that they are good.
The lender has faith in you
If a lender is about to provide excellent financing options then that is a good sign that they value your business. All a bank wants to do is work with companies who will be able to make timely payments.
Responsible lenders will check your profit if they are receiving payments as a result of your sales. They do want to be sure that you are still making an adequate profit after your loan payments. They will, of course, secure proper documentation of everything.
They offer you the amount that’s right for you.
Banks don’t want to lend you less than you truly need nor will they lend you more than you can comfortably pay back. They are very keen to what it takes to be successful without pushing a business into financial chaos. A good lender not only wants what is good for them but also what will benefit you
They want a healthy relationship with you.
Responsible lenders will not lie to you if you can’t afford a loan. Their goal is to create a stable and long-term business relationship with you. It only benefits them if they look for a way to have a win-win situation.
They handle your credit documentation.
One of the responsibilities of lenders is to report your payment information to the credit bureaus regarding your loan with them. The reporting of your payment history allows your business credit record to build and grow so you can enjoy hassle-free applications for loans in the future.
They are legit.
Although not legally required responsible lenders believe in and follow the “Bill of Rights of Small Business Borrowers” This belief explains that the borrower has the following rights;
– Transparent pricing and terms
– Non-abusive products
– Responsible underwriting
– Fair treatment from brokers
– Inclusive credit access
– Fair collection practices
Types of Lenders
When you have already identified the qualities responsible lenders should have, the next step in your road to loan is to know the list of options of lenders you can approach.
Peer-to-Peer lending agencies deal with loans from investors who provide funds for a “diversified portfolio.” Although this type is not the ideal option for low-interest loans, it does not have a lot of requirements compared with the usual bank loans.
In contrast to the peer-to-peer type, direct lenders offer loans from their in house funds. It’s like the usual loans from banks. A faster release of loan money is likely to be given to borrowers in this type.
If you’re aiming for a larger amount, then banks are still the best. They give you a significant amount with a low-interest rate. Aside from that, other banks offer a longer payment period depending on their terms and conditions. However, banks have more requirements for the need of collateral before giving you a loan.
Credit unions are known for small business loans. Their interest rates are occasionally lower than that of the banks. But you must be a member of a credit union to be eligible.
Small Business Administration or SBA
An SBA loan is a quasi-government loan that lets businesses get funds from credit unions and partner banks while at the same time protecting the bank from devastating losses. The SBA has a lot of loan programs, but the most popular program, as you can probably imagine, is the Guaranty Loan Program. Interests rates are typically lower, payment periods offered could be longer. However, application requirements are tough.
Successful requests for small business loans require much thought, time to make decisions, effort to know who the responsible lenders are, and most times an application hassle. Fortunately, once everything falls into place and is completed, you will be able to start and grow your business in the way you dreamed. Best of luck!