Dec 25 2010
Business Loan Rates
Small business loan rates can vary. If the business is new, the personal financial history and credit score of the owner(s) is a top consideration for all lenders. When a business is new, it is required to show it is legally established and has insurance coverage against theft and fire. A loan for a riskier business, such as Internet companies tends to run higher than for a more stable business such as medical or legal practices.
For an established business that is expanding, loan criteria tend to be more focused on the business itself, rather than the owners. In the case of an existing business seeking funding, sales records, business bank statements and financial statements such as a statement of assets, income statement and a professionally organized balance sheet are invaluable. A business will need to the additional profits that the expansion will likely bring in. Often times the collateral that a lender will require from a business will include a pledge of assets, such as equipment or property. When a loan is non-collateralized or unsecured, it typically carries lower business loan rates than Loans secured by collateral.
Another way for a small business or a new business to obtain funding at low business loan rates is to apply for loans guaranteed by the Small Business Administration (SBA). Loans will have lower business loan rates when guaranteed by the SBA. When a business owner is seeking financing for a new business, start up loans or the funding of the expansion of an existing business, the SBA’s website contains lots of useful information.
As with any type of loan, the loan decision as well as the business loan rate depends on the creditworthiness of the business, as well as sometimes the credit score of the owner. Be sure that, before you apply for any loan, you know what information is contained within your personal and business credit report(s), and what those scores are.
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