Financing

Purchasing a new or used semi-truck for your business is one of the most significant financial decisions you will ever make. The process can be lengthy and complicated. This guide will help reduce the stress of figuring out how to get a loan for a semi-truck. Included are general guidelines on the qualifications needed for financing, suggestions for lenders that can finance your new truck, and red flags that lenders will look for in the process. This guide aims to show you how to finance your semi-truck as quickly and easily as possible. 1. Determine Eligibility Every lender will have slightly different requirements for borrowers on how to get semi-truck financing. Confirm the specific requirements with your chosen lender. Here are some general eligibility guidelines to keep in mind when beginning the truck financing process: Minimum credit score: 600 (credit scores below 600 will be considered, but likely at a higher interest rate and down payment) Down payment: Expect at least 5%, although some lenders offer zero-percent-down loans for well-qualified borrowers Time with commercial driver’s license (CDL): Varies, but an owner who does not have a CDL will be considered a high-risk borrower Age of truck: Less than 10 years Truck mileage: Fewer than 700,000 miles 2. Gather Documents The documents required by each lender will vary. However, having all of these documents ready to send to the lender will expedite the borrowing process: Documents showing your business is registered Current and past bank statements (up to 12 months) Business tax returns (up to three years) Current year profit and loss statement for your business Current business balance sheet Any business licenses or required certifications Your CDL, if you have one United States Department of Transportation (USDOT) number Motor carrier number 3. Find the Right Vehicle Finding the right vehicle is not only critical for your needs, but it is critical to the lender. Lenders are looking to mitigate the risk involved with the potential vehicle financing. The older the vehicle, or the more miles it has, the higher the risk. To limit those risks, try to keep your search to trucks that meet the following criteria: Fewer than 700,000 miles Less than 10 years old Sold by a dealer (ideally, but not required) In addition, the maximum a lender will lend is what the vehicle is worth―unless you are securing a business line of credit to purchase vehicles. Lenders usually won’t lend the full purchase price so that the borrower will need a down payment of at least 5%. When shopping for a truck—especially a used one—try to get an estimated value so you know you’re getting a price that the lender will finance. You will also need the following information to give to the lender once you find a vehicle: Make, model, and year Mileage Condition report Photos of the vehicle Serial number 4. Find the Right Insurance Regardless of what type of vehicle you are financing, insurance will be required. With a semi-truck, which can cost as much as $200,000 new, financing companies will want to see that you have proper and sufficient insurance coverage. Improper or insufficient insurance could derail your business in the event of an accident. Most lenders won’t fund the loan until receiving proof of your insurance. Consult your insurance professional about finding the right coverage for your business. In general, you will need some or all of the following: Primary liability coverage Physical damage coverage, including electronic and in-cab devices Bobtail coverage and/or nontrucking liability coverage Cargo coverage to cover what you are hauling The cost of your insurance will vary depending on your driving record and prior claims on your business. Insurance rates are also based on the value of the vehicle and the contents being hauled. 5. Choose the Right Lender While there are many online lending companies that can finance a semi-truck, we have selected the five best. Each has slightly different qualifications for lending, so be sure to compare them and choose the one that makes the most sense for your business. Smarter Finance USA: Best for New Owners is excellent for new owners, thanks to a lower minimum required credit score and its low down payment requirement. With a credit score of at least 600 and at least 5% down, owners can finance a new vehicle for up to $100,000. While Smarter Finance USA will work with new owners, it prefers owners with previous driving experience and a current CDL. Balboa Capital: Best for Quick Approval has an easy online application and promises quick approval decisions. It offers flexible term lengths with fixed monthly payments. However, Balboa requires borrowers to have been in business for at least one year and have at least $100,000 in annual revenue. It also requires a decent FICO score but doesn’t specify what that score is. Wells Fargo: Best for Flexible Terms offers financing and refinancing of new and used trucks, with loan terms of 12 to 84 months. One advantage Wells Fargo has is flexible loan terms, including either fixed or floating interest rates, seasonal payment structures, term loans, operating leases, and even equipment lines of credit. Commercial Fleet Financing: Best for Lending Options In most cases, borrowers can get approved by  by filling out a one-page application. Credit approval can come in as soon as two hours, with funding in as little as 24 hours. Commercial Fleet Financing offers zero-money-down loans with flexible terms and incentives. Loans can be a standard length of 36 to 60 months or extend to up to nine years (108 months). Borrowers with credit scores below 640 are referred to its Fresh Start equipment finance division for potential financing. Commercial Fleet Financing will also review the vehicle to ensure it has a clean title and is in good working order. Bluevine: Best for Additional Funding Needs can provide funding above and beyond simple vehicle financing. It offers lines of credit that can help finance your entire business. Bluevine’s lines of credit are open to business owners with credit scores as low as 625, which can help pay for maintenance on vehicles and keep business cash flow solid while financing a major purchase. Semi-truck Financing Challenges When beginning the process of financing a semi-truck, there are some factors that can cause problems for business owners. Any conditions that could increase the risk for the potential lender will likely result in a higher interest rate and a larger down payment. It could even result in a denial from the lender. Here is a list of potential challenges a borrower may face when financing a semi-truck: Being a new business: If you have only been in business for a short time, lenders will be less likely to finance a large investment like a truck loan. New business owners may want to consider leasing a lower-risk, lower-cost option to build their business credit. Poor credit: If you have poor credit, the lender will see you as a high-risk borrower. If you are approved for the loan, it will likely be at a higher interest rate and a higher down payment than a well-qualified borrower. Buying your truck from a private party: Because vehicles purchased from a dealer will go through at least a basic inspection process, lenders will view a truck purchased from a dealer as a lower risk than one purchased from a private party or an auction. It will be harder for the lender to confirm the vehicle’s condition in a private sale, increasing the risk. Low cash reserves: Low cash reserves mean less money to use for a down payment, increasing the risk for the lender. Solid cash reserves signal to the lender that it will receive its payments on time, even if you have a slow week or two. A borrower with limited reserves is at a higher risk for late payments or even loan default. Additionally, it is important to maintain a cash reserve for maintenance and repair of your truck. Buying an old truck: A lender needs to find a comparable value before it lends on a used truck. This is difficult for trucks that are more than 10 years old. If a lender does lend on an older vehicle, it will likely require a larger down payment to reduce the risk. The lender will likely charge a much higher interest rate, which could approach rates for unsecured loans. Not having a CDL: Lenders view non-CDL borrowers as high-risk borrowers. If you don’t have a CDL, who is driving your truck? Likely, it means that someone will be driving it that doesn’t have a vested interest in the security of the vehicle. Bottom Line Financing a new or used truck is a significant investment for your business. This guide should help you prepare for all the steps needed to secure semi-truck financing. It is essential to shop around—when looking for a vehicle, a lender, and an insurance provider. You are financing a piece of equipment that costs as much as a new home in less than 24 hours. Do your homework, and you’ll get the best deal for your business when financing your next truck.

The SBA 504 loan program from the Small Business Administration combines two loans—one from a lender and one from a community development corporation (CDC)—that can be used for commercial real estate and other fixed assets like equipment. The lender portion covers up to 50% of the loan, the CDC portion covers 40%, and the borrower is responsible for providing the remainder. What an SBA 504 Loan Is SBA 504 loans are commercial real estate loans that are a combination of two loans, one from a traditional bank and one from a nonprofit lender known as a CDC. Both the lender portion and CDC portion of the SBA 504 loan are closed at the same time. SBA 504 loans are available up to $14 million, with terms up to 25 years, and at interest rates that are lower than those offered by traditional banks. What SBA 504 Loans Can Be Used For An SBA 504 loan can be used to purchase land and existing buildings, to pay for property improvements and renovations, or to build a new facility. Additionally, SBA 504 loans can be used to finance other fixed assets, such as equipment and machinery, or to refinance debt that was used to acquire fixed assets. Under the SBA loan regulations, CDC/SBA 504 loans can be used for these specific purposes: Buying land and existing buildings on the land Paying for property improvements such as adding parking lots, connecting utilities, and landscaping Renovating or expanding an existing facility Building a new facility Buying other fixed assets like long-term equipment and machinery Refinancing debt: An SBA 504 refinance applies to debt that was incurred primarily to acquire 504-eligible fixed assets; the existing debt must be at least two years old and in good standing What SBA 504 Loans Cannot Be Used For SBA 504 loans are great for commercial real estate, but there are several uses of the loan funds that are prohibited. Some of the restricted uses for SBA 504 loans are: Working capital Materials, supplies, or inventory Advertising or marketing Normal operating expenses Speculative real estate investments Rental properties If you need an SBA loan for any of those purposes, read our article on SBA 7(a) loans. SBA 7(a) loans can also be used in conjunction with an SBA 504 loan. If an SBA 7(a) loan better matches your business needs, offers very fast approval and funding times for SBA 7(a) loans up to $350,000. Plus, it can prequalify you in minutes. SBA 504 Loan Qualifications Qualifying for an SBA 504 loan is very similar to qualifying for a traditional commercial real estate loan. You will need to be able to demonstrate repayment ability and have a clean financial history. Some of the basic qualifications include: Minimum credit score: 680 Debt service coverage ratio (DSCR): At least 1.25x; you can calculate your DSCR by dividing your annual net income by the sum of the annual principal and interest payments on your loans, which are the SBA 504 loan and any other existing debt obligations Down payment: 10% to 20% of the combined CDC/SBA loan amount Clean financial history: There should be no recent bankruptcies, foreclosures, tax liens, or delinquent government loans in your personal or business financial history In addition to the general SBA loan requirements, the SBA 504 loan program has four specific requirements: the property must be owner-occupied, jobs must be created or retained as a result of the loan, the business must have a net worth of less than $15 million, and any equipment purchased with the loan must have a service life expectancy of at least 10 years. 1. Property Must Be Owner-occupied For the property to meet the SBA 504 requirements, it must be at least 51% owner-occupied. You can rent out part of the building but must be using the majority of it for your business. If the loan is for new construction, the building must be at least 60% owner-occupied at initial occupancy, increasing gradually to 80% owner-occupancy within 10 years. 2. Jobs Must Be Created As part of the loan process, you will need to explain how your use of the loan proceeds will create or retain jobs that would otherwise be lost or how you’ll support public policy goals. Currently, the rule is that one job must be created or retained for every $65,000 of funding. This increases to one job per $100,000 borrowed for small manufacturers. You can also qualify for an SBA 504 loan by enhancing other public policy goals like energy conservation and supporting minority business development. 3. Net Worth of Less Than $15 Million Your business must have a tangible net worth of less than $15 million and an average net income of less than $5 million after taxes for the last two years. 4. At Least 10-Year Equipment Life Any equipment purchased with the funds must have at least a 10-year economic life. Some acceptable items include machinery and larger manufacturing or commercial-use equipment. SBA 504 Maximum Loan Amount Current SBA rules set the maximum amount you can borrow with an SBA 504 loan at $14 million. However, due to restrictions on the use of proceeds and qualifying projects, the amount your project qualifies for might be lower. Most banks prefer to provide SBA 504 loans for projects of $500,000 or more, due primarily to the effort required to close a 504 loan. SBA 504 Loan Rates and Fees With an SBA 504 loan, you can expect to pay low interest rates and minimum fees. In general, the annual percentage rate (APR) on the bank portion of the loan will range from 4% to 10%. The rates for the CDC portion of the loan are fixed and currently range from 2.5% to 3% APR. Keep in mind there are two loans made as part of an SBA 504 loan. The first is a loan from a traditional lender, such as a bank, for up to 50% of the total loan package. The rates, terms, and fees for that portion of the deal have very few restrictions. As such, they can vary from borrower to borrower. Most people find the commercial real estate loan rates and terms for this portion of the deal to still be very favorable compared to other financing options. The second part of the loan is issued by the CDC, up to 40% of the package. The rates, terms, and fees for this portion of a 504 loan are regulated heavily. The CDC loan is a 10-, 20-, or 25-year, fully amortizing, fixed-rate loan. It works the same way as a traditional mortgage loan. The borrower pays equal monthly payments for the life of the loan, at which point the loan is completely paid off. SBA 504 Loan Interest Rates & Fees: CDC Portion of the Loan The interest rate on the CDC portion of the 504 loan consists partially of an interest rate that is set to Treasury bills that are sold at auction on a monthly basis in the case of the 20- and 25-year loans and on a bimonthly basis in the case of the 10-year loan. The remainder of the CDC loan interest rate is made up of three fees: SBA guarantee fee: This is an ongoing SBA monthly guarantee fee of .914% of the principal balance of the note, calculated at five-year intervals, beginning with the first payment. Servicing agent fee: The Central Servicing Agent (Wells Fargo) collects an additional 0.10% of the principal balance of the note, calculated at five-year intervals. CDC servicing fee: This varies between 0.625% and 2.00%, with a maximum of 1.50% in rural areas. The CDC will pay 0.125% to the SBA each month and keep the remainder. As of June 2021, the interest rates on the CDC portion of the 504 loan are: 10-year term: 2.612% 20-year term: 2.764% 25-year term: 2.883% CDC Portion of the SBA 504 Loan: One-time Fees When the SBA 504 loan is made, there are some initial one-time fees. These will be financed into and amortized over the life of the loan. Common one-time costs include: Underwriting fee: 0.375% to 0.4% Processing fee: Up to 1.5% Legal fee: $2,000 to $5,000 Funding fee: 0.25% Guarantee fee: 0.5% While all of these fees may seem overwhelming when you look at them individually, even with all of the fees included, they only amount to 2.5% to 3% of the value of your loan and will be amortized with the loan note. CDC Portion of the SBA 504 Loan: Prepayment Penalty Prepayment penalties are common with commercial real estate loans and are also a feature of an SBA 504 loan. The prepayment penalty is calculated on a sliding, decreasing scale. The penalty is figured on the debenture interest rate―at the time the loan was issued―not the effective interest rate of the loan, and only on the CDC portion of the loan. For a loan with a 20- or 25-year maturity, the penalty applies to the first 10 years of the loan and decreases by 10% each year. For a loan with a 10-year maturity, the penalty applies to the first five years of the loan and decreases by 20% each year. Example: Assume when a 20-year loan was issued, the effective interest rate for the month of July 2019 was 4.060%, and the debenture interest rate was 1.980%. The prepayment penalty declines by 10% of the debenture rate each year. It drops by a factor of .198% each year. For this example, the prepayment penalty percentages would look like this: SBA 504 Loan – CDC Prepayment Penalty SBA 504 Loan Interest Rates & Fees: Lender Portion of the Loan The interest rate offered on the lender portion of an SBA 504 loan is at the discretion of the bank or nonbank lender and typically ranges from 4% to 10%. Ultimately, you and your representatives must negotiate the best possible rates, fees, and terms for your deal. Summary of Lender SBA 504 Loan Interest Rates & Fees In most cases, the bank or nonbank lender loan will have a five- to 10-year term amortized over 20 to 25 years. In the case of loans with 10-year terms, the interest rates usually reset after five years. This means that after five years, your interest rate could go down, go up, or stay the same. It depends on what the market rates are at that time. While the long amortization will keep your monthly payment lower, it means you will have a balloon payment due in five to 10 years unless you choose to refinance the remaining balance. Refinancing a first mortgage when a balloon payment comes due can be problematic in some cases. If your business sees a downturn prior to refinancing or if your property has significantly depreciated, it may be difficult to find a lender willing to work with you. The bank portion of the loan may come with its own set of closing costs and third-party costs, such as appraisal fees, environmental fees, architectural fees, and legal fees. Fortunately, these can typically be included in the financing as well. Loan Options for Commercial Real Estate: SBA 504 vs SBA 7(a) vs Traditional Loan Top 4 Benefits of an SBA 504 Loan The SBA guaranteed over 17% more 504 loans in Federal FY 2020 than FY 2019, an increase that is consistent over the past several years. The SBA 504 program’s popularity among businesses is due to the great advantages it offers borrowers. The four primary benefits to getting an SBA 504 loan are low interest rates, a low down payment is needed, long repayment terms are available, and no additional collateral is necessary. 1. Low Interest Rates Interest rates for the CDC portion of the loan are limited by the SBA and currently range between 2.6% and 3%. That rate is fixed and will not increase for the life of the loan. The bank’s loan doesn’t have these limitations. The rates typically fall between 5% and 10% and can be either fixed or variable. 2. Low Down Payment While most traditional commercial loans require a 20% to 40% down payment, an SBA 504 loan requires a down payment as small as 10%. If your business is a startup or the property you want to buy is a single-use building, you will need a 15% down payment. The down payment requirements increase to 20% for startups purchasing single-use properties. Even if you’re operating a startup business and purchasing a single-use building, the 20% down payment requirement with the SBA 504 loan is advantageous. As a startup, many traditional lenders may be hesitant to offer financing and, if it were offered, it would likely involve a much larger down payment. 3. Long Repayment Terms While most traditional commercial mortgages are five- to 10-year loans, the CDC portion of an SBA 504 loan has a 10-year term for equipment and 10-, 20-, or 25-year terms for real estate. Typically, the bank portion of the loan has a seven-year term for equipment and a 10-year term for real estate. The longer repayment term offered on the CDC loan reduces the monthly payment, making the payments more affordable. 4. No Additional Collateral The real estate or other fixed assets being financed by the SBA 504 loan are generally sufficient as collateral. With no additional collateral required beyond the real estate or fixed assets you are financing, your remaining assets remain lien-free. How to Apply for an SBA 504 Loan The bank portion of an SBA 504 loan can be funded by any bank, credit union, or commercial lender that works with the SBA. Many financial institutions will partner with a CDC and be able to assist in finding a CDC partner. Conversely, a local CDC may partner with several banks in their area. There are 243 CDCs nationwide. To find one that will work with you, we suggest using the SBA’s CDC Finder tool. Additionally, rankings of the top 504 lenders in your area may be available through SBA district offices. When you apply, a business plan and financial projections will be required. Additionally, the past three tax returns for the business and any owners with 20% or greater ownership interest will need to be provided with the application. A good lending option for SBA 504 loans is . Lendio is an online broker that works with more than 70 financial institutions and will provide numerous potential matches for your application. It may save you time searching for a bank or CDC to work with. Bottom Line An SBA 504 loan is one of the first types of financing you should consider if you’re purchasing commercial real estate to operate your business out of or if you’re buying long-term equipment that holds its value. The low down payment will allow your small business to preserve more cash for working capital, and the low interest rates and long repayment terms will be easier on your cash flow.

Obtaining a Small Business Association (SBA) startup loan requires several steps and doing some homework before applying. Startup businesses are deemed higher risk because of historical failure rates that can reach as high as 50% within five years. As a result, SBA startup loans may require a larger down payment and additional collateral to get approval. Here are the six steps to get an SBA startup business loan: Develop a detailed business plan: Before even starting a business, putting a plan on paper is essential to help set a roadmap for a new venture. Determine how much money you need: Financial projections and a budget are critical for determining the amount of financing needed. Determine your eligibility: Knowing the SBA’s requirements for borrowers will help you understand if you can qualify for financing. Obtain your down payment: Lenders and the SBA will require owners to contribute funds to their venture. Find an SBA lender: Business owners need to be able to find the right lender to help them get approved. Complete your application: Gathering the necessary information will save you time when applying. Most Common SBA Startup Loan Types SBA startup loans work like many of the other SBA loans that are available but are harder to obtain. While the SBA guarantees loans that lenders make to businesses, they do not directly issue loans except in cases of economic disaster. This means that banks and other lending institutions can choose not to work with startup businesses unless they are capitalized well, and business owners have very good credit. SBA startup loans typically fall into one of three types: SBA 7(a) Loans: These loans can be used for working capital and operating expenses. Startups with a proven business model, such as franchises, may be able to qualify. Businesses can obtain up to $5 million in financing. SBA Express Loans: Express loans are a part of the 7(a) program and offer financing up to $350,000. Given the lower financing limit, newer businesses may be more likely to qualify for this loan. SBA Microloans: This program helps nonprofit intermediary lenders provide up to $50,000 in working capital to small businesses and nonprofit childcare centers. 1. Develop a Detailed Business Plan A detailed business plan is critical for startup businesses to help establish a roadmap for the new venture. The business plan is especially important for helping educate lenders providing financing for startups. It allows you to explain your concept and show evidence that the startup will be successful. The SBA requires a business plan be submitted with your loan application process. The more detail it contains, the better your chances are of getting funded. The business plan should include: Executive summary: The summary briefly explains what your business will do and any products or services it plans to offer. This portion also includes who the owners are and their percentage of ownership in the business. Product or service overview: This section provides more detail about what products and services your business offers and how your business is different from the competition or provides something that is not offered. Target market: Identify who you are targeting as customers. Examples include age, income level, or geographic areas. Competitors: List your competitors, if any, and how your business will differentiate from them. Business projections: Create projections based on conservative estimates of how the business will perform financially, including a cash flow analysis. Financial plan: This is a detailed analysis of how much money you need to borrow, how you will spend it, and how you will be able to pay off the loan. The more detail you can provide lenders on how the money will be used, the less likely it is they will ask follow-up questions. Resume or personal background: Include relevant information on the owners’ professional history and how it relates to the new business. Any of your business plan’s projections and forecasts should be backed up by relevant industry and geographic data. Be prepared to defend and justify those forecasts to a lender. The SBA partners with several organizations, including the Service Corps of Retired Entrepreneurs (SCORE), Small Business Development Centers (SBDC), and Women’s Business Centers, to help small businesses develop business plans. 2. Determine How Much Money You Need Part of a sound business plan includes putting together a sound financial plan that has a reasonable estimate of how much money your business will need. This requires the creation of a detailed cash flow analysis of your new business. Cash flow analyses should be realistic to the business's capacity to grow and the market it is operating in. It should also account for seasonal variations in revenue and expenses as well as your loan payments to help create an accurate forecast. A spreadsheet can help make the process of putting together a cash flow easier. 3. Determine Your Eligibility Getting an SBA loan involves meeting several requirements that involve your personal credit, relevant experience, and a sufficient amount of equity or down payment to invest in the project. Personal Credit Typically, the SBA will require a credit score of 680 for any individuals with at least a 20 percent ownership stake in a business. The SBA also requires that all owners not have any recent bankruptcies, tax delinquencies, or defaults of government loans. Experience Having at least five years of relevant experience in the industry that you are starting a business in is essential for providing confidence to lenders. If you lack sufficient experience, your business plan needs to identify any hired staff or paid consultants with relevant experience who will assist you. Collateral Lenders will look to place liens on any collateral that is available. This can be either personal real estate or business assets. Down Payment Lenders may require as much as 25% of the project costs as investment from startup business owners. This is higher than the requirement the SBA has in place for more established businesses due to startups having a historically higher rate of failure. This down payment can include a down payment on the purchase of a commercial property or equipment as well as accessible cash in reserve. 4. Obtain Your Down Payment If your startup financing needs involve getting working capital, your down payment is never paid to the lender. SBA lenders will typically only approve startups for around 75% of the total cost of a project. This helps show the lender that you have sufficient skin in the game to help support the business. For example, if a business needs $100,000 to fund a project fully, the lender will require the business owners to have $25,000, or 25%, in available cash at the time of loan closing. The lender would then provide the additional $75,000. If you were purchasing commercial real estate, those funds would be provided to the lender at the time of closing as a down payment on the property purchase. Putting together the funds for a down payment can come from several different sources. These sources include retirement funds, borrowing from friends, family, and other sources, and crowdfunding. Retirement Funds Many business owners use a portion of their retirement accounts to help provide initial financing to their startups. These can involve one of three methods: using a rollover for business startups (ROBS), borrowing funds from a retirement account, or withdrawing funds from a retirement account. ROBS A ROBS is used to help get access to retirement funds before reaching 59 1/2 years of age without paying withdrawal penalties or taxes. For individuals with over $50,000 in retirement assets, it’s a good solution to help provide initial financing. A ROBS works by rolling over funds from a 401(k) or individual retirement account (IRA) account into a new retirement account for your business. The retirement account then purchases shares in your business, providing you funds to pay any necessary business expense. ROBS transactions are regulated by the IRS and United States Department of Labor to ensure funds are being used properly and that employees of businesses funded by ROBS have access to the retirement plans that are established. An experienced ROBS provider, such as , can help you get set up with a ROBS and will assist you with any legal questions you may have prior to establishing a ROBS. Its initial consultation is free of charge. If your retirement accounts have balances of less than $50,000, you still have the other two remaining options. Borrow From Retirement Account Borrowing from your 401(k) or IRA account requires that you pay it back within five years. Failure to do so would result in a withdrawal penalty on the unpaid balance of the loan, and you will be responsible for paying taxes on the unpaid balance. Withdrawal From Retirement Account If you are 59 1/2, this solution is available without withdrawal penalties. However, you will need to claim any portion of the withdrawal as income on your tax return if the funds are from a traditional IRA or 401(k) plan. Borrow From Friends and Family Starting a new business has a higher level of risk, regardless of how solid your plan is, and if something happens and you’re unable to repay these people, then it could damage your relationships. Any borrowing from friends and family should include an agreement with terms and conditions established on repayment of monies borrowed. Personal or Home Equity Loans Some borrowers may take out unsecured personal loans to help them get sufficient down payment for a business loan. Taking out a home equity loan to get the necessary down payment is an option if a business owner has sufficient equity in personal property and needs some financing to provide an extra down payment to get approved. Using available equity in one’s home may make sense, given interest rates are typically low, especially for borrowers with good credit. The drawback with personal and home equity loans is that you would have an additional loan payment that would increase your debt to income ratio (DITR), which is one of the factors that lenders will look at for financing. Also, with unsecured loans, the interest rate may be significantly higher than with other types of loans. Crowdfunding Crowdfunding is a way to fund your project through the small financial contributions of many individual investors. Crowdfunding can involve offering a reward, equity in the business, or simply a donation to help the business owner meet a financial goal. Successful crowdfunding involves strategic campaigning, a compelling story, effective and exciting communication about the campaign, and delivering on any promises that the business makes. While a lot of work, a crowdfunding campaign can provide a strong statement of the case for a business and help provide momentum in advance of the business’ launch. 5. Find an SBA Lender The number of lenders that will provide SBA loans to startup businesses is limited. Many lenders who are SBA preferred will require your business to have at least one year in operation before they will consider your application. In cases where a business owner has significant industry experience or is well capitalized, the lender may consider your application. Some questions you should ask potential lenders before you apply for an SBA startup loan are: Do you provide loans to businesses with less than a year of operation? What fees are involved with originating and closing on the loan? What does your application process entail? How long does it take to get a decision? What additional paperwork is required with the application? Is there a prepayment penalty? Another path to finding the right lender is to use a broker or consulting company that works with SBA lenders. Brokers know exactly which lenders are willing to work with startup businesses and can match a business to a lender likely to fund your loan. works with a network of SBA lenders and can help startup businesses get the funding they need. 6. Complete Your Application and Submit Gathering the sufficient paperwork and completing an application for a loan will take some time. When you apply, you should be prepared to submit the following documents: The completed loan application Your business plan with financial projections and cash flow analysis A personal financial statement, which will highlight your personal assets and any liabilities that are outstanding, such as a mortgage The last three years of personal tax returns from all individuals with at least 20% ownership in the business Copies of your business’s organization documents, such as articles of incorporation or limited liability company (LLC) formation Once you apply, a decision on the loan can take several weeks or even a few months. Approval times vary based on the application’s loan amount and the lender’s familiarity with your business. Business owners may also be asked by the lender to submit additional paperwork or answer questions relevant to the use of funds or to the business venture. Answering these promptly will prevent further delays in decisions from the lender. Bottom line While getting an SBA startup loan is not an easy process, it is attainable for businesses that have a strong business plan, sufficient down payment, and whose owners have very good credit and industry experience. Using a broker, such as Guidant, with experience in finding SBA startup loans could provide an added boost to a business’s quest for startup funding.

Apple business financing is an equipment lease that lasts 12 to 36 months and is available to businesses on transactions starting at $4,000. Two lease types are available—fair market value (FMV) and $1 buyout—based on whether you intend to keep the equipment or trade it in at the end of the lease. Apple Business Financing vs Top Alternatives How Apple Business Financing Works financing equipment leases are fulfilled by CIT Bank, an online bank offering deposit accounts, business credit cards, term loans, and other business financing. Borrowers apply for Apple business leasing or loans through a web portal (offered by CIT) or by calling Apple Business directly and speaking to a member of the sales staff. Once the business has selected the equipment it wishes to finance, and the type of term, an application is submitted to CIT, who either approves or declines the equipment lease based on the business and borrower’s creditworthiness, and other factors. What Apple Business Financing Offers Two different Apple business leasing programs are available: FMV and $1 buyout. An FMV lease is advertised as a no-interest option to potential borrowers, and $1 buyout leases are charged interest at competitive industry rates. Who Apple Business Financing Business Loans Are Right For Business owners who need to purchase Apple computers, tablets, phones, and accessories should consider Apple Business Financing. Both leasing programs are attractive and have their own benefits. Business owners who need cutting-edge technology: The FMV program is excellent for a business that knows it will want to upgrade its equipment at the end of the lease term and want to take advantage of low monthly payments as well as 0% financing. With the FMV program, buyers will pay off at least 80% of the equipment value over one to three years, at which point they can elect to upgrade or to purchase the equipment at FMV. Businesses that want to own the equipment long-term: For business owners who want to own their equipment at the end of the lease term, Apple business leasing offers a convenient and simple $1 buyout lease. This option is most similar to a loan and gives businesses ownership at the end of the lease term with the symbolic payment of $1. At this point, business owners can choose to sell the equipment or continue using it. Apple Business Financing Rates and Fees Interest: 0% for FMV; 5.5% to 15% for $1 buyout Documentation fee: $0 Application fee: $0 Apple business financing does not disclose its interest rates, nor does it disclose a rate range. Apple indicates that its FMV lease does not have any interest charges, making this similar to a same-as-cash agreement. Interest is due on its $1 buyout and is likely between 5% to 15% based on equipment leasing standards. Compared to other leasing options on our list, Apple business financing is likely to offer the most competitive rates and pricing on Apple equipment, and for borrowers utilizing the FMV lease to upgrade equipment, Apple will offer additional discounts, making this an excellent option for businesses that plan to upgrade their equipment consistently. Apple Business Leasing Terms Lease terms: 12 to 36 months Minimum order: $4,000 Financing type: FMV and $1 buyout lease Other financing types: None Apple business financing offers one of the shortest lease terms on our list, starting at one year, and going up to three years at most. With a minimum order of $4,000, businesses are likely to qualify for this program with a couple of MacBooks and assorted accessories, so this program casts a pretty wide net in terms of eligibility. Apple business financing takes a simple approach to financing, offering two equipment programs; the FMV and $1 buyout lease. Businesses looking for greater flexibility in financing programs may wish to consider offers from other lenders. Apple Business Financing Qualifications Credit score: 640-plus Time in business: N/A Personal guarantee: Required if you have been in business less than three years Qualifying for Apple business financing is refreshingly simple. A personal credit score of 640 or better is recommended, although Apple’s financing partner CIT Bank is likely to qualify your business for financing based on additional factors such as strong business tradelines, revenue, and debt service coverage ratio (DSCR). Apple leaves other criteria, such as time in business, undefined, meaning you may qualify for this program even if your business is a startup. Additionally, Apple business financing requires a personal guarantee from all partners with at least a 20% stake in the business, if your business has been in operation fewer than three years. Pros and Cons of Apple Business Financing Apple business financing can be a great way to get needed equipment while keeping upfront costs low. There are several pros and cons to financing your equipment using Apple Business financing, however, and we cover a few here. Pros of Apple business financing include: Upgrade equipment frequently: With an Apple FMV lease, you can upgrade equipment easily, keeping your technology on the cutting edge. Keep upfront costs low: With a lease, you can make low monthly payments, keeping most of your cash flow for other business needs. Accessories and other costs can be financed: Apple business financing allows accessories and other costs to be rolled into the lease payment. Cons of Apple business financing include: Higher long term costs: Over time, the cost of leasing equipment will be higher, especially if you can get away with keeping equipment longer. Difficult for new businesses: Businesses without two years in operation will need to explore other options. Creates debt: Having a leasing liability on your books may make your business less attractive to other lenders. How to Apply With Apple Business Financing Businesses looking to finance equipment starting at $4,000 can apply for and filling out an application, with same-day approval and funding available. : Best for Apple and non-Apple equipment is a large provider of technology equipment, offering computers and other hardware from hundreds of manufacturers. CDW’s business financing for Apple equipment is fulfilled by VAR Technology Finance. It should be noted that businesses financing non-Apple equipment may have their financing fulfilled by one of several other equipment financing partners and that the terms for that financing will vary. CDW Rates and Fees Interest: 0% for FMV; variable for $1 buyout leases Documentation: $0 documentation on select leases Application fee: $0 application fee on select leases CDW’s solution for Apple business financing bears many similarities to Apple’s own offering, including offering a 0% FMV lease and $1 buyout lease. Like Apple, CDW and VAR do not publish their interest rates on $1 buyout leases. However, they are likely to be between 5.5% and 20% based on industry averages. Also, like Apple, CDW indicates that documentation and application fees are waived on select leases, although that wording means that you should probably read the contract’s fine print carefully to ensure that your lease qualifies. CDW Terms Lease terms: 12 to 60 months Minimum order: $2,500 Financing type: FMV and $1 buyout Other financing types: None CDW offers somewhat better lease terms on Apple equipment, with lengths from one to five years, which may help businesses keep costs down as well as go longer between equipment upgrades. CDW also offers leases starting at $2,500, meaning businesses contemplating smaller purchases may wish to consider this option. Lease options are simple, like Apple, with an FMV and $1 buyout being the only options. CDW Qualifications Credit score: 680 Time in business: Minimum 2 years Personal guarantee: Yes Borrowers hoping to get Apple equipment financed through CDW’s lease program should have average or better, and businesses need a minimum of two years in operations to qualify. Although CDW indicates on its website that it is possible to get financing for businesses with less than two years in operations, this does not appear to apply to Apple equipment leases. How to Apply With CDW To get started with an equipment lease on purchases of Apple products $2,500 and apply with online, with same-day approvals and funding available. From there, a representative can help you apply with its financing partner. : Best for Flexible Repayment Options is an established equipment leasing company that offers a wide variety of flexible repayment options on a variety of different equipment, including Apple technology products, including equipment leases and equipment loans. It’s known for quick, same-day approvals and competitive interest rates. Crest also offers business loans, which makes it a great option if you’re comparing financing options. Crest Capital Rates and Fees Interest: 5.5% to 20% Documentation fee: $0 Application fee: $275 administrative fee Crest Capital is known for offering very competitive interest rates to businesses with strong credit profiles. Most leases on Apple equipment will average between 5.5% and 9.5%, although Crest will attach a higher interest rate to transactions with more risk involved. While Crest mentions no documentation fees, it does have a standard $275 administrative fee on all of its leases. Crest Capital Terms Lease terms: 24 to 72 months Minimum order: $5,000 Financing type: FMV, $1 buyout, and 10% option leases Other financing types: Term loans Crest Capital lease lengths start at two years, and financing is available on equipment starting at $5,000, of which 25% can be soft-costs such as installation, training, and delivery. Borrowers can select from FMV, $1 buyout, and 10% option leases; and Crest offers a variety of flexible repayment programs such as seasonal, deferred, and step-up—where the monthly payment due grows incrementally based on increased revenues. Crest Capital Qualifications Credit score: 650-plus Time in business: 2 years Personal guarantee: Yes Crest Capital has some of the more stringent credit criteria on our list, asking for a minimum credit score of 650 as well as two years in business. However, it does not set a minimum revenue so that businesses with lower revenues can still apply for equipment leases. A personal guarantee is required, and Crest Capital may file for a Uniform Commercial Code (UCC) lien on business assets. How to Apply With Crest Capital For application only financing of Apple equipment starting at $5,000 with , apply online to receive same-day approval with no further documentation required. : Best for New Businesses may be a good alternative to Apple business financing for businesses with six months or more in operations and are known for its relaxed credit criteria, working with borrowers with credit scores as low as 620 on equipment leases. National Funding offers term loans, lines of credit, and merchant cash advance (MCA), which borrowers can compare to the costs of equipment leasing. National Funding Rates and Fees Interest: 8% to 19% Documentation fee: $0 Application fee: $0 National Funding’s interest rates tend to be higher than some other competitors, with a range of 8% to 19%. This is likely due to its generally relaxed credit standards and the ability to finance businesses with only six months in operations. However, borrowers should take note of its Guaranteed Lowest Payment program, which offers to match the lease payment from a competitor. National Funding Terms Lease terms: 36 to 60 months Minimum order: $15,000 Type of financing: FMV, $1 buyout, and 10% option lease Other financing types: Term loans, lines of credit, and MCA National Funding offers standard lease types, including FMV and $1 buyout. The length of lease terms is less flexible, starting at a minimum of three years. Business owners who don’t need a fleet of new MacBooks might find the minimum order of $15,000 difficult to swallow and may want to consider an option like CDW, with a much lower minimum order of $2,500. National Funding Qualifications Credit score: 620-plus Time in business: 6 months Personal guarantee: Yes National Funding offers approachable minimum criteria for securing a lease on Apple equipment. Businesses with more than six months in operations have a high likelihood of obtaining funding. Like the other options on this list, a personal guarantee is generally required from partners in the business with a greater than 20% stake. How to Apply With National Funding Business owners interested in financing Apple equipment with can receive quick approvals by filling out a simple application online, with funding available as soon as the same day. : Best for Small Businesses With Poor Credit makes the list for its relaxed credit criteria, financing borrowers with a 600 credit score or better, as well as its application only financing on leases starting at $3,000. Balboa offers several different lending programs in addition to equipment leasing, including term loans, and MCA as well as lines of credit. Balboa Capital Rates and Fees Interest: 5.5% to 30% Documentation fee: No Application fee: Unknown Expect to see interest rates ranging between 5.5% to 30% with Balboa Capital. Borrowers shouldn’t expect to pay additional documentation fees, although application fees may apply. Balboa does not disclose any application fees on its website, and borrowers should ask about any additional fees that may apply. Balboa Capital Terms Lease terms: 24 to 72 months Minimum order: $3,000 Financing type: FMV, $1 buyout, and 10% option leases Other financing types: Term loans, lines of credit, and MCA Balboa offers relatively flexible equipment lease terms for Apple equipment financing, with term lengths ranging between two to six years, and minimum orders starting at $3,000. In addition to FMV and $1 buyout lease types, borrowers interested in 10% option leases can explore that route with Balboa. Balboa Capital Qualifications Credit score: 600-plus Time in business: 1 year Personal guarantee: Yes With the most lenient credit criteria on the list, Balboa presents as a good option for newer businesses with poor credit, requiring only one year in operations, and a 600 credit score for financing. Balboa may also require a personal guarantee from the business’s major partners. How to Apply With Balboa Capital To apply for Apple equipment financing with , borrowers can fill out a quick and easy online application, with same-day approvals and financing available. : Best for Short-term Financing Needs Business Financing is fulfilled through Behalf Financial and stands apart as a good alternative to Apple's business financing due to the wide variety of technology available in TigerDirect’s inventory, including Apple computers and accessories as well as relatively lenient credit qualifications. Businesses with at least one year of operations and two years of personal credit history can apply for net 30 financing, allowing for no interest if the balance is paid within 30 days. TigerDirect Rates and Fees Interest: 0% on net 30; 1% to 3% monthly thereafter Documentation fee: $0 Application fee: $0 TigerDirect charges a monthly interest rate of between 1% and 3% and no further fees for documentation or applying. For short-term funding, this may be suitable but represents 12.01% to 36.60% annually, compared to between 5.5% to 9.5% on a lease with Crest Capital. TigerDirect Terms Lease terms: 30 to 180 days Minimum order: $500 Financing type: Revolving line of credit TigerDirect’s Apple equipment financing acts as a revolving line of credit, with term lengths between 30 and 180 days available and a minimum order of $500. This may be preferable to businesses that can pay off equipment quickly and intend to it long term, vs a lease which might have more favorable terms but with no equity in the equipment at the end. TigerDirect Qualifications Credit score: 640 Time in business: 1 year Personal guarantee: Yes TigerDirect does not publish its minimum credit qualifications, and upon inquiring, indicated that a fair credit score is necessary to obtain credit. However, that can be influenced by other factors such as the strength of the business’s trade lines as well as time in business and revenue. A likely minimum credit score to obtain short term financing with TigerDirect is a 640 credit score, although other factors such as business credit may influence the decision as well. How to Apply With TigerDirect To access straightforward net 30 or short-term Apple business financing options, you can apply online and receive approvals and financing as quickly as the same day. Bottom Line Apple business financing is a cost-effective way to obtain Apple equipment for your business and is particularly cost-effective if you choose to do an FMV lease. There are alternatives to Apple business financing that you will want to consider, including a nearly identical FMV lease option from CDW. Which option fits your business best will depend on whether you intend to buy or upgrade the equipment at the end of the lease, among other criteria.