How Limited Is a Company Loan?

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There may come a time in running your business when you need a boost financially. In other words, you might need a company loan to get your business off the ground or help you toward your goals.

Thankfully, there is a huge range of loans to choose from to help your business excel. You’ll need to choose a finance option that suits your needs. You will want to ensure you’re eligible for approval and able to make the repayments. For starters, you could choose from a payday loan, a traditional bank loan, an equipment loan, and more.

Read on as we look at the limits of each of these loans and point you toward finding the right loan for your company.

What Are the Types of Company Loans?

There is a range of company loans you can use to boost your business, whether you need new premises, replace equipment, or you’d like to invest it back into your company for growth. You can choose from independent lenders, or your bank to see where you can get the best deal to suit you.

Generally, traditional bank loans have a lengthy application process but can offer you a range of amounts of finance to help you achieve your goals. Independent lenders are best for those businesses that may not meet the requirements of a traditional bank. Here are some of the company loans that are popular with business owners.

Start-Up Loans

These loans are specifically targeted at business owners who are looking to get their company off the ground. Amounts that you can borrow differ from lender to lender, as do repayment plans, so comparing is advantageous.

Traditional Bank Loans

These are company loans you can apply for if your business has been operating for longer than two years. Banks tend to only lend to companies that have been in operation for a while, as these companies pose less of a risk to the bank. Your bank can offer you varying amounts to use however you’d like.

Equipment Loans

These loans help businesses get the equipment and machinery they need to operate the company smoothly when they don’t have a lump sum to spend upfront. You can pay a lease for any equipment you need in more affordable chunks.

Invoice Financing

This is a great option if your cash flow is often affected due to late invoice payments. A lender will advance you a percentage of the invoice and keep a small percentage for themselves. This type of company loan can help you to cover business expenses while you’re waiting to be paid.

Are You Eligible for a Company Loan?

There are so many options when it comes to financing your company, whether you need to free up cash flow, lease equipment or make improvements. Unfortunately, however, depending on the loan you choose, your company may not be eligible.

Some of these loans are limited to companies that meet certain criteria. For example, traditional bank loans may be harder to obtain if you have been operating for less than two years.

However, there are other options from independent lenders. This means company loans of various types are available. This makes business financing accessible to almost everyone. Below, we’ll look at some of the factors that help financial lenders make their decision.

Creditworthiness

This is one of the most important factors that lenders consider when deciding whether you qualify for a company loan. Your business credit score is how they will know if you can make repayments. Your business credit score is determined on a scale of 0-100. It shows lenders a glance at how you manage your bills and repayments. For example, they can see whether you meet obligations on time or if you struggle to pay back what you owe.

If your business credit score is not in the best shape, there are ways you can improve it. Doing so will make you appear more trustworthy to lenders. So be sure to pay bills early or on time and make sure you don’t miss repayments.

Business Eligibility

Most businesses can apply for loans. However, you should make sure that your business fits the criteria your lender sets out. For example, the lender may have a stipulation that you must have been in business for a certain amount of time. Or they might limit their lending to a particular type of business.

Lenders might also exclude businesses that do not hold appropriate licenses, agencies that earn a commission, and businesses that tolerate illegal activities.

Choose a Loan That’s Right for Your Company

You should choose a loan that suits your company perfectly. With options including loans for bad credit, you will surely find the solution that is best for you.