Recessions are significant, widespread, and sustained contractions of economic activity marked by declines in the gross domestic product (GDP), and it can be brutal for many small businesses. That’s why it’s essential to ensure that there is ample cash on hand for slowdowns so you can continue to make sound, proactive decisions.
If you’re considering a small business loan to ‘recession-proof’ your business, here are some answers to some frequently asked questions, and options to start your research.
Where do you get a business loan? Business loans are usually offered by commercial lenders who specialize in providing them. They offer flexible terms and conditions, allowing borrowers to repay over longer periods of time. These loans also allow companies to expand without having to worry about liquidity issues.
What business loans are available out there?
Business loans come in two types: secured and unsecured. Secured loans require collateral as security, such as property or equipment which the lender can seize if you fail to repay the loan. It’s a risk to put up collateral, but it can increase the loan amount and secure a lower interest rate. Unsecured loans don’t require collateral.
What are lenders looking for when deciding whether to grant a business loan? Lenders will be less likely to give out loans if they think their customers won’t pay them back. That’s why they tend to prefer borrowers with credit scores in the good and excellent ranges, or 690 and above. They also look at how long you’ve been in business, and your annual revenue. Many lenders require a minimum annual revenue, which can range anywhere from $50,000 to $250,000, for business loans.
How much should I request for my business loan?
Business loan amounts vary depending on the size of the company and its financial situation at the time of application. In general, online providers will consider lending 10% to 30% of a business’s annual revenue, all depending on the lender, type of loan, credit history and collateral. The smartest approach is to settle on the smallest loan amount from which you can generate a profit.
How do I choose the best lender for my business?
Increase your chances of approval by finding the small-business loan that fits your needs. If you need funding quickly, online lenders are far faster than with banks. Of the loans you qualify for, choose the one with the lowest APR and best terms for you, where you feel confident you can manage the loan’s repayments and the timetable offered. We’ve compiled a few exceptional options to start your research!
LendThrive offers fixed rate business loans up to $150K in as fast as 24 hours. With low fixed rates and flexible terms, small businesses can secure the financial freedom to flourish, even in a recession.
Since 1977, Charter Capital has delivered a smarter approach to equipment financing. With commercial equipment loans and leases ranging from $10,000 to $1,000,000, this family-owned business offers four decades of accumulated knowledge and experience.
Funding Circle offers fast, affordable loan programs with a simple online process and funding in as little as 48 hours. Whether you need to hire new staff, expand your business operations, or grow your product line, a loan from Funding Circle can help!
How can I best leverage my business loan during a recession?
Treasury management software makes financial transparency a breeze. Integrating external market and client data within their own data warehouse, Kayenta visually represents accurate financing data with easy-to-use analytical tools. Try it before you subscribe to it: they offer a free month trial for new users!