How Does It Work?
Business loans allow a company to get an extra boost while maintaining business as usual. A small company with three or more months of sufficient credit card processing should qualify. A merchant cash advance is a small lump sum advance that is paid back by giving a fixed percentage of your credit card receivables on a daily basis. The loan is usually paid back in up to six months.
When applying for a small business loan you will start by filling out an application or writing a proposal depending on the lending institution’s preference. The application or proposal will provide basic contact information to you will most likely be asked to include the desired loan amount and loan term, how you will pay back the advance and financial documents showing credit and income history.
After completing an application you will either go through an acceptance process which is either done by a person at your lending institution or an application system which uses algorithms to accept or deny an application. Upon acceptance you will be contacted for further information or for an appointment to meet with the lender. The use of the money will be stipulated in your loan agreement whether you are using it to build or expand a building, payroll for your employees or lease equipment. A monthly or annual interest rate will apply to you borrowing the money. This should be explained to you before you even sign your loan agreement so you understand how much you will be paying monthly or as a lump sum – another stipulation that should be in your loan agreement.
It is advised to have a lawyer look over you loan agreement before you sign to make sure you are covered fairly. If you are needing a smaller loan amount up to $2,000 an installment loan may be a better option.