The Small Business Administration (SBA) makes microloans of up to $50,000 available to small businesses through nonprofit lenders. Interest rates for SBA microloans range from 8% to 13%, with terms of up to six years. SBA microloans are available to startups and established businesses, and provide funding much faster than other SBA loans. What is…
10 Venture Capital Advantages & Disadvantages
Like other startup funding options, venture capital advantages and disadvantages should be considered before funding. Venture capital offers funding to startups that are growing quickly in exchange for equity. It also eliminates debt payments and provides founders with advice and guidance. These are only some of the pros and cons of venture capital to consider….
10 Pros and Cons of Angel Investors
An angel investor is a wealthy individual that invests money in startups. Founders that are past the idea stage with a product and some early traction are best suited for angel funding. The availability of angel investment is a key advantage for startups, while the cost of equity is its largest drawback. Most angel investors…
SBA Express Loans: Types, Costs, Terms & Where to Find
A Small Business Administration (SBA) Express loan provides small businesses with long-term working capital up to $350,000. These loans feature interest rates of 4.5% to 6.5% above the prime rate and typically have a 10-year term. SBA Express loans carry fewer documentation requirements than 7(a) loans but still take 30 to 90 days to fund….
50 Best Franchises & 50 Worst Franchises by SBA Default Rates
Over 100,000 franchises are started in the United States annually. However, not all franchises are created equally. Using loan data obtained directly from the Small Business Administration (SBA) for 2000 – 2018, we evaluated the 50 best franchises based on SBA loan repayment rates and the 50 worst franchises based on SBA loan default rates….
35 Best Crowdfunding Sites for Small Business
Small businesses can raise money with crowdfunding sites in exchange for rewards, future repayment, or equity in the company. Startups and more established companies can raise funds online while getting new customers. The best sites offer low fees and a large audience, and allow a variety of campaigns. Choosing the Right Crowdfunding Website There are…
The 5 C’s of Credit: What Banks & Lenders Actually Look For
The 5 C’s of credit are character, capacity, capital, conditions, and collateral. Together, these serve as a way for lenders to evaluate the creditworthiness of potential borrowers. Banks and lenders generally look at your ability to repay, level of debt, how you plan to use the funds, and the collateral you have to offer. The…
SBA Form 1919: What the Borrower Information Form Is & How to Fill It Out
SBA Form 1919 is the borrower information form required by the SBA. This form includes personal identifying information as well as responses to 26 questions. Questions range from citizenship status to the potential jobs created or retained through the loan. Following the right steps when filling out SBA Form 1919 can prevent delays in your…
How to Get an SBA Restaurant Business Loan in 4 Steps
Restaurant business loans are tough to qualify for because lenders perceive the restaurant industry as volatile. Loans backed by the Small Business Administration (SBA) make it so lenders are more willing to issue these loans to buy a restaurant, open a new location or obtain working capital. SBA loans have rates between 5 percent to…
Debt to Income Ratio: How to Calculate & DTI Formula
The debt to income (DTI) ratio measures the percentage of your monthly debt payments to your monthly gross income. For example, if your monthly debt payments are $3,000 and your monthly gross income is $10,000, your DTI ratio is 30%. Lenders check this during the application process and typically require a DTI of 43-50% or…
Collateral Coverage Ratio: What it is, Formula, & How to Calculate
The collateral coverage ratio represents the percentage of a loan secured by a discounted asset and is used by lenders to set maximum loan limits. For example, mortgage lenders typically value property at a discounted rate of 80% of fair market value (FMV) and offer loans with a minimum collateral coverage ratio of one, or…
What Is Fixed Charge Coverage Ratio: How to Calculate & FCCR Formula
The Fixed Charge Coverage Ratio (FCCR) indicates a firm’s ability to pay its fixed charge obligations (expenses) from its income before interest and taxes. It determines the extent to which recurring charges consume the company’s cash flow. The ratio derived from the computation is the number of times a firm can cover its fixed expenses…