January 24, 2023
6 Best Hard Money Lenders for 2023
The best hard money lenders should provide short-term loans for fix-and-flip and fix-and-hold investors for a variety of property types. They should also have the ability to fund in three weeks or less and provide competitive rates and fees compared to other hard money lenders. Although some require a minimum amount of investment experience, our list below does include some providers that can work with first-time investors. Here are six of the best hard money lenders: : Best overall for fast funding and low rates : Best for borrowers who want lower rates after gaining more experience : Best for borrowers looking to flip multiple properties quickly : Best for borrowers with low credit scores : Best for funding smaller loans quickly : Best for funding large loans quickly Best Hard Money Lenders At a Glance *Minimum credit score of 680 is required for first-time property flippers Kiavi: Best Overall for Fast Funding & Low Rates RCN Capital: Best for Borrowers Who Want Lower Rates After Gaining More Experience AMZA Capital: Best for Borrowers Looking To Flip Multiple Properties Quickly CoreVest: Best for Borrowers With Low Credit Scores Baselane: Best for Funding Small Loans Quickly Flip Funding: Best for Funding Large Loans Quickly How We Determined the Best Hard Money Lenders In choosing the best hard money providers, we looked at the following criteria: Interest rates and fees Required investor experience Minimum credit score Range of loan amounts offered Types of loans offered Speed of funding Customer reviews and ratings Alternatives To a Hard Money Loan Hard money loans can be a good way to acquire properties that are ineligible for traditional methods of financing. These loans can also be used to get funding if you have bad credit. However, hard money loans do carry higher rates and fees, and you can get another type of business loan if you want to save some money: Investment property financing: You can use these types of loans to resell a property for a profit, or to keep it for income-producing purposes as a rental. Compared to a hard money loan, investment property financing can be more difficult to qualify for. However, rates can be very competitive, usually in the range of 5% and 8%. If you’re interested in this type of financing, is an online lending marketplace that allows you to choose from multiple loan offers. Commercial real estate (CRE) loan: If you don’t need funds quickly, a CRE loan can offer more competitive rates and fees while still allowing you to get cash to purchase, refinance, or renovate a property. We recommend as the best overall provider of commercial loans because of its low rates and range of commercial loans that includes Small Business Administration (SBA) loans. Business lines of credit: Many line of credit providers can offer up to $250,000 or more on a revolving line of credit, and interest is charged only on the amount you draw. We recommend as it provides credit lines up to $250,000 with rates as low as 6.2%. Frequently Asked Questions (FAQs) How do hard money loans work for beginners? Some hard money lenders will require you to have flipping experience or rental property ownership to obtain a hard money loan. However, lenders such as and don’t require flipping experience, so choose one of those if you’re a beginner just getting into flipping. How do you qualify for a hard money loan? Qualifications for hard money loans tend to be less stringent than other CRE loans. They often require you to qualify as an incorporated business rather than an individual. While they may consider a minimum credit score (usually around 650), they often rely on your investing experience and the potential property earning capacity to determine whether you qualify for the loan. Is hard money lending a good idea? If you don’t need funding quickly, hard money loans aren’t a good idea. They have high interest rates, high fees, and short repayment terms. The advantage of a hard money loan is you can be funded in as little as 10 days. If you don’t need the money right away, if you have a strong credit profile, and if the property isn’t in disrepair, you should consider other types of CRE loans, such as SBA loans. Bottom Line Hard money loans provide a source of short-term financing if you aren’t eligible for traditional financing methods. These types of loans typically are used by borrowers with bad credit or investors looking to acquire properties in need of repairs for a fix-and-flip or fix-to-rent. Rates and fees tend to be higher than other types of financing, but the lenders on our list offer competitive rates when compared to other hard money lenders.
January 23, 2023
How To Get Unsecured Startup Business Loans in 6 Steps in 2023
Getting an unsecured startup business loan involves several steps that include understanding your business needs and what a lender can offer. This will allow you to more effectively use the funds to grow your business by obtaining equipment, capital, or other needs. With a good understanding of all your options, you could also save money on loan fees and interest charges. Step 1: Evaluate Different Types of Unsecured Startup Business Loans Unsecured business loans don’t require you to pledge collateral, so it’s a lower risk to you since the lender can’t take away your business property even if you default on the loan. These loans come in different forms. Step 2: Determine Your Eligibility Based on Loan Requirements Qualifying for an unsecured loan as a startup can be difficult if you have a limited history of being in business. Lenders can look at your credit scores, business finances, and business plan in deciding whether to issue you a loan. The exact eligibility criteria will vary based on the lender and type of loan. The terms you’re offered will also depend on how well-qualified you are. Step 3: Shop Multiple Lenders Lenders each have different policies and loan programs, and researching at least several providers will improve your chances of finding the right one for your business—you can start with our list of the best unsecured business loans. Lenders sometimes offer introductory rates or temporary incentives, so it’s worth checking with a lender even if you are familiar with its loans. It can also be helpful to get quotes from multiple types of providers, such as credit unions, banks, and online lenders. Step 4: Submit an Application When you have decided which provider to use, your next step will be to submit a formal loan application. Alternatively, if you’re still shopping lenders, you may need to submit an application to get an accurate rate quote or additional information. Most applications can be completed online in less than 5 minutes, although many providers also allow for this to be done in person or over the phone. Loan applications will ask for basic information about you and your business, such as your time in business and monthly income. You’ll also specify the amount and type of loan you’d like to get. Step 5: Provide Documentation to the Lender Providing documentation to the lender is required so that it can conduct its review of your business and personal finances in determining whether the business meets its lending requirements. The following are commonly requested items that you should be prepared to provide to the lender: Federal tax ID number Personal and business tax returns Personal and business bank statements Cash flow statements Profit and loss (P&L) statements Business plan Articles of incorporation for your business Step 6: Review & Accept Your Loan Offer Once the lender has reviewed your application, it will provide you with written disclosures detailing the terms of the loan you have been approved for. You should review these disclosures carefully and ask questions about anything that’s unclear. Important loan terms to review include: Loan amount Interest rate Fixed vs variable rate loan Loan term Frequency of required minimum payments Loan fees Other Things To Consider Taking out an unsecured startup business loan is not something to take lightly because missing payments could result in late fees or legal action to be taken against you or your business. You could also end up accruing unnecessary expenses if you don’t use the loan proceeds effectively. Here are some additional items to consider before you take out a business loan. Alternatives To an Unsecured Startup Business Loan Unsecured startup business loans can sometimes be difficult to qualify for, and they may not always have the lowest rates compared to other types of loans. If you're having trouble getting a loan or want a cheaper source of funding, here are some other ways you can fund your startup: Rollover for Business Startups (ROBS): This allows you to access your personal retirement accounts tax and penalty-free to fund a business. It isn’t a loan, so you’ll be able to save money on interest fees. This is a complex transaction with tax penalties if done incorrectly, so it’s recommended that you use a highly rated provider such as to walk you through the process. Loans from friends/family: If you can’t get approved for a loan from a bank, you can consider friends or family who are willing to loan you cash. They may also provide better rates compared to some lenders. You can read our guide on how to ask friends and family for a loan to avoid legal complications or relationship issues. Invoice factoring: This allows you to receive an advance on invoices that you’ve billed to clients but have not yet been paid. You can typically get funding for up to 80% of the unpaid invoice amount, and companies like can also offer quick funding times. Bottom Line An unsecured startup business loan can be a great way to get funds to grow your business without pledging any business collateral. Having strong personal credit and a good business plan can improve your chances of getting a loan approval but rates can be higher compared to other types of loans, so it’s important to shop rates with multiple lenders and consider alternative sources of funding. You should also have a plan for using the funds in the most effective way to generate revenue and have alternative sources to repay the loan if you run into cash flow shortages.
January 23, 2023
7 Best Unsecured Business Loans for 2023
The best unsecured business loans should feature a combination of low rates, competitive fees, a quick application process, and flexible repayment options. They should also not require you to pledge any collateral or have any liens placed against your property in exchange for a loan. Here are the seven best unsecured business loans: : Best overall unsecured loan terms : Best for simple application process : Best for established businesses with low credit : Best for businesses with low revenue : Best for short-term financing : Best for large network of lenders : Best for low credit scores National Funding: Best Overall Unsecured Loan Terms QuickBridge: Best for Simple Application Process Rapid Finance: Best for Established Businesses With Low Credit Scores Kabbage Funding: Best for Businesses With Low Revenue Fora Financial: Best for Short-term Financing Lendio: Best for Large Network of Lenders SBG Funding: Best for Low Credit Scores How We Selected the Best Unsecured Business Loans In choosing the best unsecured business loans, we considered the following criteria: Interest rates and estimated APRs Loan fees and availability of discounts Speed of application, approval, and funding processes Minimum credit score, time in business, and revenue requirements Types of loans offered Maximum loan amount Repayment terms Customer reviews Industries served Alternatives To Unsecured Business Loans As a business owner, getting an unsecured business loan lowers your risk since you can receive funding without having to pledge specific property as collateral, something that is often done with a uniform commercial code (UCC) filing and lien. However, because some of the risk is shifted to the lender in the event of a default, rates and fees tend to be higher than other types of financing. Here are some options you can consider if you want to save money on loan fees and interest charges: Rollover for business startups (ROBS): This is not a loan that has to be repaid. Rather, it allows you to use money in your personal retirement accounts—tax- and penalty-free—for business purposes. You’ll generally need at least $50,000 to be eligible, and because it is a highly complex transaction, we recommend using one of our highly rated ROBS providers, such as , to walk you through the process. Small business credit cards: Credit card providers frequently offer promotional rates as low as 0%. Many also have rewards programs that allow you to earn anywhere from 1% to 3% cash back on purchases made with the card. SBA loans: These have competitive rates and fees for businesses that demonstrate good credit and financials. Getting an SBA loan can take several weeks, so it’s a more ideal option if you’re not in a hurry to receive funding. Frequently Asked Questions (FAQs) What happens if I miss payments on an unsecured business loan? The exact process can vary depending on the state you’re located in and your specific loan agreement. However, missing several payments can result in late fees being charged. Late payments can also be reported to credit bureaus, which can lower your credit score. If you miss multiple consecutive payments, typically six or more, the lender may file a lawsuit against your company in an attempt to recoup its losses. How hard is it to get an unsecured business loan? Unsecured loans are riskier for lenders since they cannot repossess business assets in the event you default on the loan. To offset the higher level of risk, lenders often charge higher interest rates or fees, along with requiring higher credit scores or a personal guarantee for the loan. What types of unsecured business loans are available? Some examples include term loans, lines of credit, working capital loans, MCAs, and invoice factoring. Bottom Line If you need funds to continue growing your business but don’t want to pledge collateral to get it, an unsecured business loan is a good option. These can be more difficult to qualify for and come with higher rates and fees, but the providers in our guide offer competitive loan terms and features. Since the best loan will depend on your unique business goals, you should shop multiple lenders before committing to a provider.
January 18, 2023
8 Best Banks for Small Business Loans in 2023
The best banks for small business loans should provide your company with financing options needed for both short- and long-term business needs. In addition, they’ll provide outstanding business checking products and great business support services, including merchant services, investment products, and point-of-sale (POS) products. Banks that only offer lending products or have limited business support products should provide services outstanding enough to merit inclusion on this list. Here are the eight best banks for small business loans, with links directly to the company’s website: : Best overall for variety of business loans and providing free business credit score †: Best for long-term owner-occupied commercial real estate (CRE) loans : Best CRE multifamily lender with best business checking and credit cards *: Best small business line of credit : Best CRE loans for multifamily properties : Best digital-only bank with full-service business lending †: Best for smaller Small Business Administration (SBA) 7(a) loans : Best for SBA Express loans up to $25,000 *Providers are financial technology (fintech) platforms backed by and Federal Deposit Insurance Corp. (FDIC)-insured through a supporting bank partnership (Coastal Community Bank for Bluevine). †Providers are geographically limited. See the U.S. Bank geographic limitations and Huntington Bank geographic limitations to check if your business is located in a service area. Best Banks for Small Business Loans At a Glance Bank of America: Best Overall for Variety of Business Loans & Providing Free Business Credit Score U.S. Bank: Best For Long-term Owner-occupied CRE Loans Chase: Best CRE Multifamily Lender With Best Business Checking and Credit Cards Bluevine: Best Small Business Line of Credit Wells Fargo: Best Commercial Real Estate Loans for Multifamily Properties First Internet Bank: Best Digital-only Bank With Full-service Business Lending Huntington Bank: Best for Smaller SBA 7(a) Loans South End Capital: Best for SBA Express Loans up to $25,000 How We Compared the Best Banks for Small Business Loans When comparing the best banks for small business loans, we considered the loan offerings provided by each bank and the other services offered. These services include business checking, business credit cards, and other business support services. We compared their loan products and the following criteria: Number of loan offerings Size of loans offered Loan qualifications required Time in business and minimum revenue requirements Loan rates and maximum terms How widely available the bank is Before applying for any loan, be sure to check out our guide on how to get a small business loan. Frequently Asked Questions (FAQs) Which bank is best for a business loan? Thanks to its wide range of business lending products and the ability to receive your business credit score for free with its checking product, Bank of America is the best bank for small business loans. What bank does the most SBA loans? Huntington Bank has issued the most SBA loans so far in 2023, with more than 1,600 loans approved, according to SBA.gov. Live Oak Bank has issued the most money in SBA loans in 2023, with more than $441 million approved. How do you get a business loan from a bank? To get a loan from a bank, you should follow these six steps listed in our how to get a small business loan guide: Determine what you need the funds for. Determine your eligibility. Determine your capacity to repay. Gather your information. Find the right lender. Submit your application. Bottom Line All the banks listed provide either a wide range of loan product offerings or a limited selection of the best loan products on the market. These products should be readily available for well-qualified borrowers. In addition, except for South End Capital, all the banks listed offer outstanding business checking products and other business support services. Regardless of which bank you choose, you’re getting a great all-around bank that can help your business succeed. If you would rather shop around for loan products from multiple banks, is an excellent option. Its marketplace of more than 75 lenders will allow you to get multiple offers from just one application, which lets you choose the best rates and terms available. Visit Lendio’s website to apply.
January 4, 2023
7 Best Equipment Financing Companies for 2023
The best equipment financing companies should offer a combination of low rates, fees, excellent customer service, and flexibility in repayment options. While the leading equipment financing lenders will depend on the nuances of your specific business, the providers on this list are excellent in categories that would be beneficial to many business owners. Each of them also has a particular strength that makes it stand apart from other lenders. Here are the seven best equipment financing companies for loans and leases: : Best overall for low requirements and funding speed : Best for equipment leasing : Best for growing companies seeking good customer service : Best for long-term financing : Best for fast funding : Best for flexible payment options : Best for large network of lenders *No minimum credit score requirement with six months of business history and $120,000 in annual revenue. Smarter Finance: Best Overall for Low Requirements & Funding Speed eLease: Best for Equipment Leasing National Funding: Best for Growing Companies Seeking Good Customer Service SBG Funding: Best for Long-Term Financing US Business Funding: Best for Fast Funding Triton Capital: Best for Flexible Payment Options National Business Capital: Best for Large Network of Lenders
December 29, 2022
What Is a Business Line of Credit & How Does It Work?
A business line of credit is a loan that lets you draw against a credit limit and deposit it as cash into your bank account. It’s a revolving loan, so as you pay down the balance, you can then draw additional funds you need up to the credit limit. In most cases, monthly payments are required, and the full balance of the loan must be repaid in less than 24 months. You’ll pay interest only on what you use, making it a useful tool for having quick access to cash to cover unexpected expenses. As an example, if a lender gives you a business line of credit with a credit limit of $100,000, you can choose to draw any amount up to that limit. Drawing $75,000 will give you $75,000 in cash deposited to your bank account, and this must be repaid within the time frame specified by your loan agreement, typically less than 24 months. Highly rated providers of business lines of credit, such as , offer loan amounts up to $250,000 and a quick funding process. For more information or to apply, visit Bluevine’s website. How a Business Line of Credit Works Step 1: Choose a lender and submit an application Pick a lender based on your ability to meet its qualification requirements. You can also consider what it offers and what’s most important to you. This can include customer service, rates offered, fees charged, flexibility of approval criteria, loan amounts offered, and funding speed. Prioritize what you must have in a loan and what you can do without, as it can be difficult to find a lender that does well in each area. Most lenders have applications that can be completed in less than 5 minutes. You can specify the type and amount of loan you’re seeking and provide basic information about your business. Make sure to get quotes from multiple lenders before choosing one. If you’re unsure where to start, you can check out our list of the best small business lines of credit. Step 2: Provide documents to the lender Be prepared to provide the lender with financial statements for yourself and your business. This information is used to confirm that the information on your application is correct, that your business meets the lender’s requirements, and that you have the capacity and ability to repay the loan. Tax returns, bank statements, cash flow statements, and profit and loss (P&L) statements are commonly requested items. Step 3: Review and accept terms of loan approval The terms of your approval will depend on your qualifications. Businesses with strong credit and income and those that have been in operation for several years can often qualify for high credit limits and low interest rates. Other important terms of your loan can include prepayment penalties, minimum draw amounts, inactivity fees, annual fees, and repayment periods. Step 4: Begin using your line of credit and making loan payments Upon accepting the terms of your loan, your line of credit will be available for use within 24 to 48 hours—and no payments are required until you draw funds. When this is done, funds will be deposited into your bank account and the loan must be repaid within the time frame specified in your loan agreement, typically six to 24 months. Step 5: Provide lender with documents needed for annual reviews Many lenders require an annual review of your business to renew your line of credit. This is to ensure you’re still in a position to repay the loan. You may need to provide updated financial documents such as tax returns, cash flow statements, and P&L statements. Based on a review of these documents, your line of credit can be renewed with no changes, terminated, or renewed with different terms, such as a higher rate or reduced credit limit. Types of Business Lines of Credit There are different types of small business lines of credit: Unsecured business line of credit: This doesn’t require you to pledge any business collateral for the loan. If you default on the loan, your lender won’t have any right to repossess your business assets. Secured business line of credit: This requires you to pledge assets as a condition of receiving the loan. If you default, the lender has the right to take possession of your assets to recoup its losses. Who Should Consider a Business Line of Credit If you’re a business owner who wants quick access to cash to cover emergencies and can pay off the loan in a short time frame (typically 24 months or less), you should consider a business line of credit. Unlike other types of loans where you receive a lump sum of cash up front, a line of credit allows you to draw funds only when you need: You have income that fluctuates throughout the year: Fluctuating income can sometimes make it difficult to cover all monthly expenses. Having a line of credit can help cover temporary cash flow shortages. You want the ability to cover unexpected expenses easily: Unexpected expenses such as equipment breaking down can hurt your company’s ability to earn revenue. Many providers offer lines of credit up to $250,000, an amount that should be enough to cover most emergencies. You intend on paying off the loan in a short period of time: Interest rates on some business lines of credit can be higher than other types of loans, making it a more expensive form of financing. Additionally, many providers of these lines of credit require you to repay the full amount of your loan within six to 24 months. You want the freedom to use cash for any type of business expense: Once you have been issued a business line of credit, you can use it for any type of business need such as payroll, equipment repairs, travel, and more. Other types of loans, such as equipment loans, usually have restrictions on how you can use the funds. Qualification Requirements for a Business Line of Credit Credit scores: Personal credit scores above 650 give you a better chance of landing an approval, although some lenders have lower requirements as low as 600. Higher credit scores show that you consistently make timely payments and are likely to continue that trend. Some lenders may also review your business credit score. Business revenue: Minimum revenue requirements can be as high as $180,000 annually or as low as the minimum amount of income you need to afford the monthly loan payments. In some cases, personal income earned separately from the business can improve your odds of landing a loan approval. Time in business: Many lenders will require at least six months’ time in business. Lenders know that many businesses fail within their first two years of operating, so making it past that time frame can make it much easier to get approved for a business line of credit. Collateral: Pledging collateral allows the lender to repossess your property if you default on the loan. This is often done with a uniform commercial code (UCC) filing, and is required for many secured business lines of credit, but has the potential to provide you with more favorable loan terms since it reduces the lender’s risk. How To Choose a Business Line of Credit In choosing a business line of credit, consider the following features and characteristics offered. Lenders may not perform well in all of these areas, so you should prioritize which ones are most important to you: Rates: Lower rates save you money on interest charges, but also pay attention to how the rate is calculated. In many cases, the rate is variable and can change over time. Fees: Upfront and recurring fees can make a line of credit more expensive than you might think, so you should think about which ones are likely to impact you. Common fees include origination fees, annual fees, inactivity fees, draw fees, and prepayment penalties. Repayment term: Most lines of credit must be repaid within six to 24 months after you draw on the line. Payments tend to be higher with a shorter repayment period, so you should make sure you can afford to make the minimum required payments. Loan amount offered: In most cases, business lines of credit up to $250,000 can be obtained. Make sure that the amount you get is enough to cover the purchases you might need to make. Qualification requirements: In addition to making sure you meet a lender’s requirements to initially qualify for a line of credit, you should also think about your chances of being able to meet any annual renewal requirements. Many lenders require an annual review of your business line of credit to see how your business finances have changed and whether you still have the ability to repay the loan. Customer service: Check reviews to see how others have rated the lender’s level of service. The company should have long hours of operation, make it easy to reach a live person, and have knowledgeable team members. Pros & Cons of a Business Line of Credit Alternatives to a Business Line of Credit A business line may not be the cheapest option for quick access to cash. Here are some other loans that could save you money in interest charges: Small business credit cards: These are similar to an unsecured line of credit but give you the ability to make purchases directly with the card. Lenders frequently offer low introductory or promotional rates as low as 0%. Credit card stacking: This is a method of applying for multiple credit cards simultaneously. The combined credit limits on the cards can give you more purchasing power than you would otherwise have on just a single credit card. Small business loans: You can get a small business loan for a specific purpose at more competitive rates than a line of credit. Some examples include equipment loans, working capital loans, and startup loans. Bottom Line A business line of credit can give business owners quick access to cash to cover emergencies and temporary shortages of cash. However, repayment periods aren’t as long as other types of loans, so it’s usually best to use a line of credit for short-term expenses that you can repay within 24 months. Shop multiple lenders before choosing one, and consider other types of loans that might save you money while still meeting your funding needs.
December 29, 2022
How To Qualify for an Unsecured Business Line of Credit
To get an unsecured business line of credit, you’ll generally need a credit score of at least 600, six months’ time in business, and $10,000 in monthly revenue. However, specific requirements will vary depending on the lender. In some cases, having other strengths in your loan application can allow a lender to be more flexible, such as an additional source of personal income or a significant amount of cash in a bank account. For example, , one of our leading providers for lines of credit, requires a slightly higher credit score of 625. Otherwise, you can qualify with 24 months’ time in business and $40,000 in monthly revenue. You can get a decision in as quick as five minutes for a credit line as high as $250,000. How an Unsecured Business Line of Credit Works An unsecured business line of credit allows you to turn its available credit limit into cash just by making a transfer to a bank account. You can draw funds on an as-needed basis, with required payment amounts based only on what you draw. As the balance is paid down, your available credit goes back up allowing you to draw more funds. These loans are usually best for short-term expenses or emergencies, as repayment periods tend to be less than 24 months and rates also tend to be higher than other types of loans. This is because unsecured loans don’t require collateral to be pledged for the loan, so it’s riskier for lenders since they cannot recoup their losses by repossessing your business assets if you default. Qualification Requirements for an Unsecured Business Line of Credit To get approved for an unsecured business line of credit, you’ll need to meet a lender’s loan requirements, which will vary based on the lender you choose. They typically involve a review of the following items: Credit score: A high credit score, usually 680 or higher, tells lenders you aren’t likely to miss a payment. Credit scores tell lenders how you’ve handled credit in the past, and they use that information to determine the chances of you continuing that same behavior. Lenders may look at both your personal and business credit scores. Personal income: Having a strong income outside of your business can improve your chances of getting approved as it demonstrates you have additional means to repay the loan. Business revenue: Many lenders will require your business to have a minimum amount of monthly or annual gross sales to be eligible for their unsecured business line of credit. You may be asked to provide financial documents, such as bank statements, tax returns, or a cash flow and profit and loss statement. Time in business: The longer your business has been operating, the less likely it is to fail. Many lenders view businesses with at least a two-year history to be lower risk. How To Get Unsecured Business Lines of Credit In most cases, you can get an unsecured business line of credit in as little as two to three business days. Here are the steps involved: When To Apply for an Unsecured Business Line of Credit You can time your application to improve your chances of not only landing an approval but also getting the best terms possible. When you don’t need it: This may seem counterintuitive but applying for credit when you don’t need it gives you time to shop lenders without being crunched for time. Lenders are also more likely to issue loans to businesses that don’t demonstrate a strong need for credit. When you have high credit scores: Having a high credit score is an indicator that you pay your bills in a timely manner. This shows lenders you’re low risk and unlikely to default on a loan. When your business revenue is trending up: If your business has income that has been trending upward over the past two to three years, lenders will be able to calculate a higher amount of income as a basis for repaying the loan. This means you’ll be more likely to qualify your business for a larger loan amount. When you hit a milestone: Hitting a major milestone such as reaching a business anniversary or landing a new client will reflect well on your business. Lenders look favorably upon businesses that continue to grow because they’re lower risk and tend to offer better terms. When you have filed tax returns or had your financials audited: Lenders consider recently filed tax returns and audited financial statements to provide the most accurate picture of how your business is doing. This can be particularly helpful if your business finances have recently improved. When you have lots of cash reserves: Having lots of cash demonstrates to lenders that you can repay borrowed funds if needed. This means that you have a lower risk of defaulting on the loan, and lenders are more likely to give you better terms. What an Unsecured Business Line of Credit Can Be Used For You can typically use an unsecured business line of credit for any business-related expense. It can even be used as a working capital loan. However, you should read the terms and conditions of your specific loan to ensure there are no restrictions. Some lenders may have disclosures prohibiting you from making certain types of purchases. Common expenses a business line of credit can be used for include: Payroll expenses Repairs or upgrades to business equipment Rent Utilities Marketing expenses Computer software fees Business meals Travel expenses Legal fees Inventory or business equipment Pros & Cons of an Unsecured Business Line of Credit Alternatives To an Unsecured Business Line of Credit An unsecured business line of credit can offer quick access to cash, but the rates and fees can often be higher than other types of loans. If you’re not in a rush to open a new loan, then you can consider the following options that can offer better rates and fees: Small business credit cards: Many credit card providers offer introductory periods where the rate can be as low as 0%. You can also earn cash back of 1% to 2% on every purchase that’s made. Small business loans: There are different types you can choose from, such as equipment loans, working capital loans, and startup loans. is one of our highly rated providers as it has low starting rates and easy qualification requirements. Small Business Administration (SBA) loans: Businesses with strong financials and good credit can often get approved for a low-rate loan through the SBA. You can choose from several different types of SBA loans. Frequently Asked Questions (FAQs) How many business lines of credit can I have? There’s no limit to the number of lines of credit you can have. However, you’ll need to meet the lender’s requirements for each new loan that you apply for. Even if you don’t currently have a balance or payment on an existing line of credit, lenders may consider what the payments would be if you decided to draw funds from the loan. Is it hard to get an unsecured business line of credit? Yes, it can be more difficult to get an unsecured business line of credit, as you’ll typically need a strong credit score or business finances to get an unsecured business line of credit. This is because these are higher-risk loans for lenders as no business property is pledged as collateral. If you default on the loan, lenders cannot recoup their losses by taking possession of your business equipment. How fast can I access cash from the line of credit? Many lenders allow you to draw on the line and get access to cash instantly once the unsecured business line of credit is opened. However, if you want to transfer the funds to an account at a different bank, it may take two to four business days for the transaction to be completed. Bottom Line An unsecured business line of credit is a useful tool to get quick access to cash, without having to pledge business property for the loan. These loans can help with emergencies or unexpected expenses. However, the interest rates are often higher than other types of loans, making them a better option for businesses intending to pay the loan off in under a year. Before choosing a loan, you should shop rates with multiple lenders and prioritize what’s most important to you, such as fees, customer service, or flexibility of approval criteria.
December 14, 2022
6 Best Rollover for Business Startups (ROBS) Providers for 2023
A rollover for business startups (ROBS) gives you tax and penalty-free access to your retirement accounts to fund a business venture without taking out a loan. The best providers should be able to complete the rollover process for you quickly and accurately while providing resources during all stages of the transaction. This includes ongoing support and protection to ensure your company stays compliant even after the initial setup is finished. Here are the six best ROBS providers: : Best overall for customer service, legal, and audit support : Best for quick setup and access to funds : Best for lowest fees : Best for small businesses with fewer retirement plan participants : Best for franchises : Best for simple ROBS transactions *Maintenance fee is waived for your first year and is billed at a rate of $899 annually beginning your second year. The fee covers up to 10 plan participants; $75 per additional participant. Guidant Financial: Best Overall for Customer Service, Legal & Audit Support Benetrends Financial: Best for Quick Setup & Access to Funds IRA Financial: Best for Lowest Fees MySolo401k: Best for Small Businesses With Fewer Retirement Plan Participants FranFund: Best for Franchises Pango Financial: Best for Simple ROBS Transactions How We Chose the Best Providers When evaluating the best ROBS providers, we considered the following criteria: Speed of application and funding process Quality of audit protection services Availability and ease of access to legal counsel Presence of satisfaction or money-back guarantees Track record of compliance with regulatory requirements Ongoing compliance support Minimum required amounts for a rollover Fees charged Customer reviews Alternatives to a ROBS A ROBS is a great way to avoid borrowing money by using your 401(k) to fund a new business. However, there are other ways to get funding that won’t directly put your retirement funds at risk in the event of a business failure. While you will have to pay loan fees and interest charges, here are some other small business loan options that can still offer low rates: SBA loan: A good choice for businesses that have good credit and don’t require cash quickly. You can contact to discuss your options. Business line of credit: Ideal for businesses that don’t require a large amount of cash. It isn’t uncommon for banks to offer an introductory 0% interest rate for a limited time. Personal loan: With good credit, you can obtain a personal loan for business purposes up to $50,000 in funds. You can contact to discuss your funding options. Frequently Asked Questions (FAQs) What is a ROBS? A ROBS, short for rollover for business startup, allows you to access the cash in your personal retirement accounts tax-free and penalty-free to fund a new or existing business venture. You’ll typically need at least $50,000, and most personal retirement accounts are eligible. What if I do a ROBS but change my mind about starting a business? You may have to pay taxes and early withdrawal penalties if you complete a ROBS but end up not using the funds for a qualifying business venture. If you're concerned this might happen, you can consider other types of startup business loans instead. What happens to my ROBS if I sell or close my business? To avoid taxes or penalties, you must take a few extra steps to properly close out your ROBS. Typically, business assets or stock are sold, after which the proceeds are used to pay company debts. The remaining funds are then distributed to shareholders. Once complete, the retirement plan is closed, and a final tax form 5500 is filed with the IRS. Bottom Line If you’re a business owner looking to fund your business without borrowing money, then you’ll be in good hands with any of the ROBS providers mentioned in this guide. They have strong track records of completing the process without having any compliance issues and provide you with audit support should it ever be needed. Every business is unique in its goals, so you should speak with multiple companies to be sure you’re partnering with the best ROBS provider for your needs.