What qualifies as a simple business loan?
Therefore, while there are no clear standards for what qualifies as an easy business loan, these financing options generally offer speed and accessibility not found in traditional financing.
Introducing the features of business loans that are easy to use.
flexible qualifications
For example, a typical requirement for a bank loan is two years in business, but some online lenders only require six months in business. Additionally, online lenders tend to have less stringent credit score requirements compared to larger banks. Some online lenders may accept a minimum credit score of 500.
Raise funds quickly
Many financial institutions can approve your application and provide funding within days, so a quick business loan can be a good option if you need money quickly. Some lenders can even leverage technology to accept applications in minutes and receive same-day decisions. Once approved, some of the fastest lenders can provide you with funds within 24 hours.
easy application
To apply for these loans, you typically fill out a simple form and upload some financial documents. You may be asked to provide the following information:
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Corporate financial statements such as income statements.
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Corporate and personal tax returns.
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Business and personal bank statements.
Instead of (or in addition to) this documentation, some lenders will ask you to connect your bank or other financial account directly to their system so they can evaluate your business more quickly.
issued by an online lender
higher interest rate
Easy business loans, with their flexible qualifications and quick funding periods, pose a greater risk to the lender issuing the loan. As a result, these lenders typically charge higher interest rates than banks and credit unions.
When is it easy to get a business loan?
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You cannot obtain other types of financing. If you don't qualify for a bank or SBA loan, a quick business loan from an online lender may be a good option. These loans typically have higher interest rates than traditional financing options, but they can provide you with the funds you need to cover a variety of expenses. Also, taking out a loan and making on-time payments may help you qualify for more competitive types of business loans in the future.
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I need cash urgently. Bank and SBA loans can take several weeks, sometimes longer, to fund. If you need money quickly, such as to cover an emergency expense or take advantage of a new business opportunity, you may be willing to pay a little more for the speed of an easy business loan.
When considering alternatives
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You can qualify for a bank or SBA loan. Generally, the best loan for your business is the one with the most competitive interest rates and terms. If you can qualify for a bank or SBA loan, these loans are likely the most affordable option for your business.
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You can wait until the loan is received. Easy business loans may seem like speed is an advantage, but they often come with higher interest rates. If your business doesn't need the cash right away, you qualify, and you can go through a longer application process, bank or SBA loans typically offer lower interest rates. Or, even if you can't qualify for one of these loans yet, take a step back and improve your credit so you can take advantage of more competitive rates and terms when you apply for a loan You may be able to increase your income. future.
Easy way to choose the right business loan
The best loan for your business ultimately depends on your individual financial needs and how well you meet the lender's eligibility requirements.
However, if you think a simple business loan is a good option for you, here are some tips to help you choose the right business loan for you.
Understand your financial needs
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Decide which type of financing is best for you. Several factors can help you decide which financing option meets your needs. You can think about how much money you need and how you will use it. You can also consider different types of business loans, including business lines of credit, term loans, equipment loans, and invoice factoring, to see which one is right for you.
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Consider how much debt you can afford. Easy business loans are likely to have higher interest rates and fees than other loans. It's a good idea to review your business's financial position and estimate how much debt you can manage before taking on additional debt.
please do research
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Check your eligibility. Review common underwriting criteria (opening hours, credit score, annual revenue) to understand where your business stands before applying.
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Research several lenders and their requirements. Easy business lenders usually do not require physical collateral, but you may be required to sign a personal guarantee. Lenders may also place a general lien against your business assets.
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Avoid predatory lenders. Stay away from lenders who promise guaranteed approval or business loans with no credit check. Although there are many reputable online lenders on the market, predatory lenders tend to target small businesses that are struggling to qualify for loans. If a loan offer sounds too good to be true, it probably is.
Consider your options carefully
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Compare multiple loan offers. You want to make sure you're getting the best deal for your business, so consider factors such as interest rates, repayment terms, fees, and prepayment penalties.
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Calculate the total loan amount. Certain online lenders quote interest rates in different ways. Some use annual percentage rates, while others use simple interest or factor rates. The best way to understand the total cost of a loan is to calculate the interest rate by annualizing it.
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Read your business loan agreement carefully. It's important to make sure you understand all the terms associated with your loan, including interest rates, fees, repayment terms, potential early payment penalties, and any personal guarantee requirements that may apply. If you have questions, you can ask your lender for clarification.
find the right business loan
methodology
NerdWallet's review process evaluates and rates small business loan products from traditional banks and online lenders. We collect over 30 data points for each financial institution using the company's website and public documents. We also review the lender's initial application flow and may contact company representatives. NerdWallet's writers and editors conduct thorough fact checks and update them annually, but also throughout the year as needed.
Our star rating recognizes small business-friendly features such as interest rate and terms transparency, flexible payment options, fast financing times, accessible customer service, payment reporting to business credit bureaus, and responsible lending practices. Points are given to the financial institution that provides the service. We weigh these factors based on our assessment of which are most important to small business owners and how significantly they impact the borrower experience.
