Business loans are very essential financial tools that enable startups and even big enterprises to grow their businesses. For those who belong to minority groups, there will always be challenges, especially when it comes to access to credit from financial institutions. This is where minority business loans come in. These types of loans are created and designed for economically disadvantaged individuals.
Another way to fund for a business is to apply for a small business grant. How about the application process? To get started, it helps that you get to know about the different business grants offered. By learning about these grants, you get to know which one suits your needs best. Make sure that you take time to check which grant you are eligible for prior to application.
Here are some tips which you can follow when applying for a business grant:
When applying for a business grant, it is essential that you know the various kinds of business grants, which include the following:
Even if let’s say you have bad credit, it does not mean that you can no longer have access to credit. There will still be funding options available which include the following:
SBA loans are widely popular small business loans that are guaranteed by what you call the SBA. They can guarantee up to about 85% of loans. If you need additional funds for your working capital or open a new branch, this might be the best option for you.
With SBA loans, lenders provide the much-needed funds. In the event that the borrower fails to repay the loan, SBA will then pay out the guaranteed amount. Given that there is a guarantee from the agency regarding the amount, the borrower gets to have longer payment terms.
The interest rates vary depending on the prime rate including the markup rate. If the loan amount is greater than $50,000 and the term is 7 years or less, the rate is 2.25%. If the loan amount is $50,000 or more and the term is also longer than 7 years, the rate is 2.75%.
In terms of repayment terms, it depends on how you intend to use the funds. If it is used for daily operations, it is 7 years. For buying new equipment, the period is 10 years and the purchase of real estate is up to 25 years.
Minority business owners who want to get an SBA loan, they can access the official website. In the website, borrowers can look at the application checklist. The documents that you need to get an SBA loan include the following:
Once you have already prepared the documents required, the next step is for you to ask for the names of approved lenders. Banks have to follow the guidelines of SBA when underwriting the loan application.
If you have only less than one year of business operating history, the funding options are quite limited. Lenders will always consider the number of years your business has been operational. What is then the option if your business is operational for less than a year? If you have good personal credit, you can actually get a personal loan. There are many lenders including banks and online lenders that offer personal loans. Most of these loans do not require collateral.
There are several loans available to minority business owners. Whether you have poor or good personal credit score, there are specific types of loans that are suitable for you. The government has created minority business loans with generous terms and lower interest rates. These types of funding enable business owners to start building their businesses without falling into a debt trap. Take time to compare the different options
Joshua is a financial lawyer who plans on writing a book about his experience on debt collection laws and lending terms and conditions. He is currently one of the senior partners at his law firm but wants to take more time off for his writing.