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Small Business Loans

Comparing Your Small Business Loan Options

Shield Funding has been helping small business owners secure small business loans for more than a decade. We offer a variety of programs that help existing business owners grow their business. We work with all industry types and sizes, as well as have options for all FICO score levels. We have custom tailored business loan solutions for those individuals that have bad credit for reasons such as tax liens, bankruptcy, or late payments and charge-offs. We also offer low rate business loans for those individuals that have excellent credit and for one particular reason or another cannot acquire a loan from a bank. Below you can explore the various business funding options available through Shield Funding.

Short Term Business Loans

Short term business loans are for business owners that are looking for immediate funding that will be paid back over a short period of time. These loans are structured where the borrower receives funding and the payback amount and any fees is determined up front. As far as rates and terms this is the best alternative financing option for business owners that do not meet bank requirements. This type of business loan is short term so the payment plan will be spread out anywhere from six months to three years.

Bad Credit Business Loans

Bad credit business loans are for business owners with poor personal credit or weak business financials. This type of funding features daily or weekly payments and the fees are determined before funding takes place. This product has very few document requirements and funding can take place as fast as the same day. This financial product is a great option when traditional financing is not a possibility.

    Small Business Loans for Women

    Small business loans for women are a financial product specifically created for female business owners. Structured similarly to our other loan programs, the rates and terms will vary depending on the credit history of the borrower or the strength of the financials of the small business. This funding program is a great resource for women that have an established business but need financing to grow. Funding for this program can take place anywhere from the same day to a few days.

    Unsecured Business Loans

    Unsecured business loans are a great option for small business owners that require funding for their business but do not have collateral. This product features daily, weekly, and monthly payment options and funding can take place as fast as 24 to 48 hours. Depending on the size of the loan there may be very few documents required.

    Apply Directly to One Small Business Loan Source

    What Small Business Loan is Right for You

    Most small business owners applying for a loan want to borrow as much as possible as they intend to use the funds to advance their growing business, however, it really comes down to what payment plan is manageable and how the business funding will be used. Every business is different, some companies receive small inflows of cash frequently making a daily payment a viable option while others receive larger payments less frequently and only a weekly or monthly payment plan would work. Additionally, some businesses might need a short term loan to cover immediate debts while others may have a longer term project requiring funding for a longer term. No matter what the reason is for the loan knowing what type of payment your business can sustain is very helpful when determining what type of loan is right for you.

    What are the Payments for a Small Business Loan?

    Knowing the amount of each payment depends on the amount of your loan and the rate you receive. There are also various payment options so the amount of your payments will be larger or smaller depending how frequently you make payments.

    How Often Do You Make Payments?

    There are a wide variety of small business loans available, and every type of loan has different payment options. Below are the three possible payment types on your small business loan. There is one exception and that is a merchant cash advance where a percentage is taken out of sales as they are processed.

    Daily Payments

    With this option the funds will be withdrawn daily, five days a week not including holidays, until the account is settled.

    Weekly Payments

    With this option the funds are withdrawn on a weekly basis, one payment per week, until the account is settled.

    Monthly Payments

    With this option payments are made on a monthly basis, one payment per month, until the account is settled.

    Insight Into the Actual Costs of a Business Loan

    What is a Factor Rate?

    Factor rates are written in decimals even though you could read a factor rate as a percentage. We decided to keep the calculator with percentages to keep it simple. As an example, a factor rate of 1.17 in percentage terms is 17%. A factor rate of 1.45 in percentage terms is 45%. To explain, borrowing $10,000 at a factor rate of 1.25 (25%) over any specified time period means you will pay back $12,500 over that time period regardless of how fast you pay it off (in the event you decide to pay it off early). It is important to point out that there is a significant difference between factor rate and APR. Factor rates are determined up front utilizing the original borrowed amount whereas APR is continuously calculated on the outstanding debt.

    What Will a Small Business Loan Cost You?

    Nobody knows your business better than you. You have to determine what borrowing costs on the money makes sense for your business no matter what the number may be. Does your business operate with tight margins? Are you planning a promotion or marketing campaign that is going to increase sales? Are you going to pay off existing debt to lower your debt financing costs? You will have to calculate the revenue you will generate with the additional capital and determine if it will cover the cost of the business loan. You also have to consider the possibility of your intended business plan failing and how the additional debt will impact your company’s future. Calculate the payments and total payback you are considering with the calculator above, look at every possible scenario in your business plan, consider your debt versus your cash flow or projected cash flow and determine what payback amount is right for your company. These are the questions you must answer to determine what a business loan will actually cost you and if borrowing makes sense.

     

    Additional Fees to Consider

    When considering the payback for a small business loan all the additional fees must be factored into your calculations. It is important to note that each lender is different and can have their own set of fees completely different than every other lender. Although Shield Funding does not charge most of these fees listed below they are common with many lenders.

    Origination Fee

    The origination fee covers the cost for processing the loan. This includes administrative costs, verifying an application, and other costs associated with approving your application and getting the funds in your business bank account. This fee is generally quoted as a percentage, generally between 1% and 5% although some lenders charge a flat fee.

    Application Fee

    This fee is charged for processing your application whether or not you receive an approval. It helps cover the costs for running credit checks and basic administrative costs for initiating the small business loan process. This fee is typically waived when the borrower receives funding although there are many lenders that do not even charge an application fee.

    Late Payment Fee

    This fee is charged when a borrower fails to make a payment on the due date. Many loan programs today have automatic payment options so the borrower does not formally submit payments, but if there are insufficient funds in the account some lenders can charge a late payment fee for every attempt to draw the payment that has been rejected.

    Pre-Payment Fee

    A prepayment fee or penalty is a fee that some lenders charge when a loan is paid back in full before it matures. However, this does not exist in the alternative financing industry. In fact, it is the exact opposite. Some lenders actually offer a discount for prepaying your loan. Be sure to know your prepayment options before accepting the funding.

    Does My Credit History Matter

    Your credit score plays a very important role when it comes to securing a small business loan. It is not as important in whether or not you get approved because we assist our clients in receiving business loans with FICO scores as low as 500. It is however a big part of determining the rates and terms you will receive. The lower your credit score the higher the risk involved with processing your loan. If rates and terms are critical to making the business funding work for your project at hand then there are steps you should take before applying. Have a look at our guide to repairing credit as well as our guide to understanding the different types of credit history.

    What are Lenders Looking for in an Application

    Debt Service Coverage Ratio (DSCR) What lenders look at to assist you in determining the payments your business can handle. Simply put your DSCR is your cash inflow divided by debt expense, or basically your overall ability to service the debt. As an example, if your cash inflow or net operating income (NOI) is $140,000 per year and your total debt expense is $100,000 each year, then your DSCR would be 1.40. Although lenders do consider external revenue sources, existing assets, business cycles and seasonality, and other factors, cash flow is a strong indicator of what type of loan payments a business has the capacity to maintain. Below find a snapshot of the actual DSCR formula.

    Bank Payment History Lenders look closely at your business banking history by reviewing your business bank statements. If you have several days of negative bank balances in a short period of time it will make it more difficult for your business to get funded. Most lenders do not want to see more than 3 to 5 negative days in any given month. Lenders also look at your deposit volume, meaning how many deposits you make a month. Another important factor considered is revenue. Lenders want to know if your revenue is increasing or declining, as well as when was the last time you generated revenue.

    Outstanding Loans A big indicator of whether or not you are eligible for funding is whether or not you have any outstanding small business loans. There are many lenders who will provide loans on top of other loans, but DSCR will play a big role in that determination.

    Business Industry Many traditional lenders want to know what industry your business is in because industries that have good cash flow are ideal. However, industries that do not have good cash flow require stringent underwriting and are more difficult to fund.

    Rent/Lease Agreements Lenders want to know whether or not your business rent or leases are paid on time as well as how much time is left on your lease.

    What are Common Documents Required for Small Business Loans

    The financial industry is no longer limited to one or two traditional loan products, there are actually a wide variety of small business loans available and being prepared when you apply guarantees the best results when funding your business. Lenders can require very little or extensive paperwork depending on the small business loan selected and the financial health of the company. As an example, bad credit business loans require just a few documents whereas prime business loans may require a long list of documents because of the better rates and terms offered. Check out our guide on the most common types of documents required when applying for business loans for more detailed information on the topic.

    • Bank Statements. A typical application requires the submission of 3 to 4 months of bank statements. Larger loans may require up to 12 months.
    • Business Licenses. Certain business licenses or certifications may be required depending on the state.
    • Proof of Business Ownership. Typical documents like articles of incorporation or related documents depending on your business structure may be required.
    • Lease Agreement for Business Property. If you pay rent or utilize a location for your business you may be required to submit a copy of your lease.
    • General Identification. Your personal identification is required. Be prepared to submit a copy of your driver’s license or the equivalent.
     
     

    Additional Documents Required for Small Business Loans Above $100,000

    • Personal Tax Returns. The application process for larger loans will also require that you verify your personal income with personal tax returns for up to 2 years.
    • Business Tax Returns. The application process for larger loans will require up to 2 years of the most recent tax returns for your business. If you do not have business tax returns because of the way your business is structured then other forms of supporting documents may be required.
    • Balance Sheet. The application process for larger loans may require a look at your most recent balance sheet to determine the financial health of your business.
    • Profit and Loss Statement. To complete your application for larger loans you may have to provide Profit and Loss statements (P&L) for the two most recent years. This insight will help determine what type of payment structure is viable for your business.
    • Business Debt Schedule. For larger loans you may be required to submit a business debt schedule. This is more insight for determining what type of payments can work for your business.

    How to Get Shield Funding Small Business Loans

    Submit Online Application

    Just answer a few simple questions in our online application and click submit.

    Select Funding Option

    Talk with one of our business loan experts to determine the best funding option for you.

    Get Your Funds

    Submit supporting documents and get the funds transferred to your account.

    Submit Online Application

    Just answer a few simple questions in our online application and click submit.

    Select Funding Option

    Talk with one of our business loan experts to determine the best funding option for you.

    Get Your Funds

    Submit supporting documents and get the funds transferred to your account.

    Submit Online Application

    Just answer a few simple questions in our online application and click submit.

    Select Funding Option

    Talk with one of our business loan experts to determine the best funding option for you.

    Get Your Funds

    Submit supporting documents and get the funds transferred to your account.