The Best Resource Available For Small Business Loans
| Estimated Business Loan Term | 2 to 36 Months | |
| Rates | 5% to 45%* | |
| Time in Business Required | 2 Months | |
| Min Credit Score Require | 500 | |
| Min Monthly Deposits Required | 2 | |
| Min Monthly Revenues | $8,000 | |
| Min Business Loan Amount | $5,000 | |
| Max Business Loan Amount | $1,000,000 | |
| Max Number of Negative Days | 4 Within a Month | |
| *rates depend on duration of funding | ||
Shield Funding has been providing small business loans to business owners for more than a decade. We specialize in securing funding for business owners and offer a variety of programs that help them 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.
Comparing Your Small Business Loan Options
| Loan Term | 6 to 24 Months |
| Rates | 9% to 45%* |
| Minimum Credit Score | 650 |
| Minimum Loan Amount | $10,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 2 to 18 Months |
| Rates | 12% to 45%* |
| Minimum Credit Score | 500 |
| Minimum Loan Amount | $5,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 2 to 36 Months |
| Rates | 12% to 45%* |
| Minimum Credit Score | 500 |
| Minimum Loan Amount | $10,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 2 to 36 Months |
| Rates | 9% to 45%* |
| Minimum Credit Score | 500 |
| Minimum Loan Amount | $5,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 6 to 12 Months |
| Rates | 5% to 25%* |
| Minimum Credit Score | 620 |
| Minimum Loan Amount | $5,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 2 to 12 Months |
| Rates | 24% to 49%* |
| Minimum Credit Score | 500 |
| Minimum Loan Amount | $8,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 12 to 36 Months |
| Rates | 9% to 45%* |
| Minimum Credit Score | 650 |
| Minimum Loan Amount | $10,000 |
| *Rates and fees depend on the duration of funding. | |
| Loan Term | 6 to 36 Months |
| Rates | 9% to 42%* |
| Minimum Credit Score | 650 |
| Minimum Loan Amount | $20,000 |
| *Rates and fees depend on the duration of funding. | |
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. 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. Knowing what type of payment your business can sustain is very helpful when determining what type of loan is right for you.
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.
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.
With this option the funds will be withdrawn daily, five days a week not including holidays, until the account is settled.
With this option the funds are withdrawn on a weekly basis, one payment per week, until the account is settled.
With this option payments are made on a monthly basis, one payment per month, until the account is settled.
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.
Nobody knows your business better than you. You have to determine what costs on the money makes sense for your business. 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 loan. 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 and determine what payback amount is right for your company.
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.
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.
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.
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 funding work for your project at hand then there are steps you should take before applying.
Step 1. Go to annualcreditreport.com and request your free yearly report for from the 3 major credit reporting agencies: Experian, Equifax, and Transunion.
Step 2. Check on your current FICO score report. Many credit card companies and banks offer this for free you just have to find which accounts offer this option. If you do not have access to this number through your existing accounts there are probably a dozen places to find your free FICO score. It is important to know the starting point of your credit score before you attempt to secure funding.
Step 3. Analyze your credit report in detail. Check for:
Step 4. Dispute Faulty Data
The three major reporting agencies have easy to follow directions on how to dispute any negative items on your credit report that you believe to be in error.
Step 5. Pay for Delete
Many consumers will find negative accounts that they actually are responsible for the debt and it is being held by a debt collection agency. Many of these agencies are willing to negotiate a settlement and provide a letter to have it removed from your credit report. Here is a sample pay for delete letter to help you get started or you can check out our complete guide about credit repair for business owners.
ADebt 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.
BBank 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.
COutstanding 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.
DBusiness 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.
ERent/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.
The application process for larger loans will also require that you verify your personal income with personal tax returns for up to 2 years.
We have had small business owners who have received funding in the same business day that they applied. It just depends on how prepared the applicant is with their documents as well as several other factors.
You can build good business credit by keeping your account in good standing over the life of the loan.
Yes. There is no restrictions on how you utilize the funds.
No. You do however have to own at least fifty one percent of the business.
Learn the difference between traditional bank business loans and small business loans offered through Shield Funding.
| BANK | SHIELD FUNDING | |
|---|---|---|
| Time in Business | 2 Years | 2 Months |
| Credit Requirements | 700+ FICO | 500+ FICO |
| Application Process | 1-6 Months | 1-2 Weeks |
| Loan Amount | $10,000-$100,000 | $10,000-$1,000,000 |
| Repayment Terms | 12-60 Months | 3-36 Months |
| Revenue Requirements | $250,000 | $100,000 |
| Payment Type | Weekly, Monthly | Daily, Weekly, Monthly |
| Restrictions | Yes | No |
| Type of Rate | APR 6%-23% | Factor Rate 1.09-1.59 (APR 22% to 100%+) |