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Business Loan Calculator

As business owners, we all know that sometimes the business needs a little boost to help it grow. Whether you're thinking about starting a business or growing your business, a business loan is one way to help fund your expansion.

Taking on a business loan can be an intimidating process. It's one that many new business owners pass up on due to fears of high fees or being unable to pay it back. It doesn't have to be this way. With a business loan calculator you can get the information that you need to know in order to make more informed decisions.

Taking on and paying back a business loan doesn't have to be rocket science. To help you, we'll share with you what business loans are and what you should expect when it comes to getting approved for a business loan. Important basics like what you might need to qualify for a loan as well as having a loan calculator handy can help you plan ahead.

Find the Business Loan That's Right For You

Business loans are a great way to get the business capital that you need. But it can be difficult when trying to figure out the right type for your business.

While different banks and countries offer different kinds of loans, you may come across these popular ones:

Business Line of Credit

Business lines of credit are similar to business credit cards in that they offer you a line of credit with which to make business purchases.

These are one of the most flexible types of loans and there's no requirement to use them all up. You can take the money when you need it, but otherwise you can keep it in the background as a security measure for any problems.

Rates can vary, but the upside is that you only pay interest on the amount you actually use. Instead of a big lump sum that you might not need anyway, you're only charged fees against the money you actually use to grow your business.

SBA Loan

If you're in the US, you should look into Small Business Administration loans; otherwise, your country may have an equivalent.

SBA loans are business loans run by the government for business owners in need of a loan who might otherwise have difficulty getting loans from private institutions.

The downside is that it's paperwork-intensive, and it can take a while to get your loan. However, it's still a loan you should look into when you're starting to expand your business.

Short-term Loans

If you need to fund something very quickly, short-term loans can be an option.

You can usually get your money in 24 hours, and interest rates can still be competitive. While there's a limit to how much banks will give on short-term loans, this is still a go-to solution for business emergencies and similar issues.

Expect to pay off the loan in a short time as well.

Term Loans

Term loans are the classic business loan type.

The business owner borrows a large sum for an extended period of time, and pays it back in smaller monthly payments. Term loans are most appropriate when the business is expanding or has long term plans with their business operations.

Payment periods for term loans are fairly generous, and are usually at a fixed rate for the whole duration. This helps you manage your cash flow, since you can trust that it won't change over time.

Invoice Financing

This type of loan helps businesses manage their cash flow better.

Rather than waiting for 30 days for the invoice to get paid, businesses can receive a portion of the cash for all outstanding invoices immediately, for a fee.

The lending institution either collects the invoice on their behalf and sends the remainder minus their fees, or the business returns the cash along with applicable fees once they have collected the invoice.

Steps to Get a Small Business Loan

Getting a loan to expand your business is a great option, but often business owners don't know how to apply for one. While the exact steps vary depending on the lender or institution, here are simple step-by-step instructions on how to get started.

Step 1: Determine what you need.

It's important to know how much you need to start or expand your business. It will determine what kind of loans you may apply for and how much you need to borrow.

Some loans only go up to a certain amount, have a minimum, or even have variable rates. It's best to have a specific project in mind with a budgeted cost.

It's also a good idea to have an estimate about how long you would like to pay off the loan. This will vary depending on the loans available per institution, but having a ballpark in your head will help you estimate your capabilities before talking to lenders.

Use our business loan calculator to gain an idea about how much you'll pay monthly depending on the terms of a possible loan. Use Annual Interest Rates of anywhere from 5% to 10% and even above, so you have an idea how much each will cost you.

Step 2: Prepare supporting documentation.

Lenders will want to know a few things before approving you for a loan. After all, they also need to make sure you will be able to repay the loan according to the terms!

If you prepare these information and documents ahead of time, you will be more likely to be approved for a loan. You should prepare the following:

  • Give them the amount you need (not want!) and what you plan to do with it. Having a well-thought-out plan on how you plan to use the capital you get will reassure lenders you've already given this loan a lot of thought. They will feel assured that your resulting revenue is more likely to pay back the loan.
  • Your credit rating or business credit rating, if available, will also be used to determine a loan approval. You can request for a copy of your credit rating ahead of time and provide this to the lender. They can also put in a request on your behalf.
  • If your business is already existing, proof of cash flow and the ability of your business to pay off a loan will improve your odds. Prepare your balance sheets and profit & loss statements from the previous years.
  • If you're securing a loan to start a new business, you need to assure lenders about your ability to pay off the loan. You can do this by providing documentation of other businesses you've handled in the past. If this is your first venture (and even if it isn't), you can provide proof that you've done ample research into making your new business a success.
  • If you can put up any collateral, be prepared if they ask for it. Most banks and many agencies will likely require a collateral or personal guarantee from you that you will repay the loan in time.

Step 3: Find an appropriate lender.

Not all lenders are the same, and there will be one for your needs. You can search online, or approach local banks in your area to discuss your loan needs. Don't forget to also look into government-backed loans as another option.

Make sure you ask your possible lender as well if you have any questions about how their loans work. Better safe than sorry!

Frequently Asked Questions

Find all answers here

How much can I borrow on a business loan?

The amount you can borrow will depend on a lot of things. These can be based on your choice of lender, the specific loan you are applying for, and their own assessment of your application. Some online lenders offer microloans with amounts as low as $1,000, but have higher interest rates. You can also apply for loans of up to $50M, but approval of these from financial institutions can come with stricter measures as well.

How can I get a first time business loan?

To raise your chances for a business loan as a first-time business owner, make sure your credit report is good, a solid business plan, and ample collateral to present to the lending institution.

How do I get money to start a business if I can't get a business loan?

There are other ways to raise capital than getting a business loan if you don't have personal savings (or don't want to use it). You can look into personal loans or personal investors, or pitch to venture capitalists and angel investors. You should also check if there are any grants or programs applicable for your business. Crowdfunding has also become popular recently when it comes to getting working capital for a budding (or even established) business.

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