Home > FAQ’s
Frequently Asked Questions
The Answers to All Your Questions
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore.
Advantages of Online Business Loans
Online business loans offer several benefits compared to traditional loans:
- Streamlined application process
- No need to visit a physical bank or lender's office
- More choices through a broker, allowing business owners to select the best-fitting online business loan
- Adaptable terms and repayment plans
- Quicker approval and fund access
Short-Term Online Business Loans
Lenders provide business owners with loan options ranging from 3 to 24 months. These are often used for specific, short-term projects like:
- Buying inventory
- Starting marketing campaigns
- General working capital needs
Long-Term Online Business Loans
These lenders offer business owners loans lasting 1 to 5 years (some lenders, like SBA, provide even longer terms). Loan amounts can reach up to $500,000, with SBA loans going up to $5,000,000. These loans are typically used for long-term projects such as:
- Major renovations
- Opening new locations
We'll help determine the best options for your specific needs.
Common Uses for Online Business Loans
Online business loans can address various business needs, including:
- Working capital for operational and other expenses
- Cash flow for payroll or one-time gap payments
- Equipment purchases
- Technology or infrastructure investments
- Inventory scaling or purchasing
- Refinancing
- Real estate acquisition
Traditional Loans
- Often require more documentation and collateral
- Have specific qualification requirements
- Follow a stricter underwriting process
- May offer lower fees and interest rates
A business loan is a financial tool used to fund business expansion, cover operational costs, purchase equipment, and pursue growth opportunities.
The Business Loan Application Process
To qualify, lenders typically examine your:
- Credit score
- Time in business
- Business bank statements (to assess cash flow)
Some lenders may request additional information during underwriting.
Yes, but you'll need:
- A strong credit history
- Low credit utilization (usually 10-30% per credit card, depending on the lender)
- Minimal credit inquiries
Yes. When applying for a business loan, use a soft credit report to avoid multiple hard inquiries. As a broker, we can use the same soft credit report without running your credit multiple times. If we notice many inquiries on your report, we may suggest having them removed to improve your approval chances.
We'll send you a link to apply for a tri-merge report from all three credit agencies. This includes FICO scores and costs $1.
Personal credit scores consider:
- Past payment history
- Credit utilization
- Credit history
- Credit mix
- New credit accounts
Business credit scores factor in:
- Past payment history
- Credit history
- Credit/debt usage
- Company size
- Industry risk
Personal credit scores range from 300-850, while business credit scores use a 0-100 scale. Both aim to represent your creditworthiness.
Yes, it's possible. While a higher credit score is preferable for better terms, other factors can influence approval:
- Strong business cash flow
- Increasing annual profits
- Time in business
- Physical business location
These elements can sometimes offset a lower credit score, potentially leading to higher loan amounts.
Absolutely. The feasibility depends on:
- Property location
- Available equity
- Credit score
- Loan type requested
We typically recommend either a private money loan or a Debt Service Coverage Ratio (DSCR) loan. After reviewing your credit report, we'll discuss suitable options during your consultation.
Collateral refers to any asset used to secure a loan. If a borrower defaults, the lender can claim this asset to recover the loan amount.
Yes, it's possible. We'll need:
- Current credit score
- Soft credit pull
- Six months of bank statements
We'll discuss specifics during your phone consultation.
A personal guarantee is a common requirement for business loans, especially for larger amounts or SBA loans. It means the business owner(s) personally commit to repaying the loan if the business defaults. This practice helps lenders mitigate risks when lending to small businesses.
While not always necessary, a DUNS number is beneficial. It's free to apply and helps:
- Establish business credit
- Build payment history
- Potentially secure better loan terms
A good Paydex score (80-100) indicates low credit risk, which can lead to improved terms on loans, insurance, and trade credit agreements.
Yes, you can. We'll assess your creditworthiness based on:
- Personal credit score (680-700+ for better terms)
- Time in business
- Business type
- Annual revenue
- Physical business location
As a broker, we can often qualify you without collateral, using a soft credit pull and no company appraisal.
Business Purpose Loans Using Real Estate as Collateral
Commercial loans typically involve larger sums for major projects like property purchases or construction. Business loans are more versatile, covering various needs from daily operations to smaller projects.
How Commercial Loans Work
Commercial loans often fund short-term operational costs or equipment purchases. They usually require collateral, such as property or equipment. Sometimes, future accounts receivable serve as collateral. Commercial real estate mortgages are a type of commercial loan.
DSCR loans focus on the rental property's income rather than the borrower's. They're ideal for:
- Self-employed investors
- Those with multiple properties
Advantages include:
- Faster approval processes
- Less paperwork than traditional loans
- No income ceiling
These loans offer flexibility for real estate investors, making them an attractive option for many business purposes.
Debt Service Coverage Ratio (DSCR) Loans
Property financing limits (FNMA and FHLMC cap investment property owners at 10 financed properties)
- DSCR loans allow investors to purchase properties under an LLC.
- Note: Real estate investors should be aware that DSCR loans may have higher interest rates, fees, and stricter credit requirements. As a broker, we offer various lender options to find the best fit for your needs.
Example: For a property renting at $4,500 with a total new monthly mortgage payment (including cash-out) of $3,330 PITIA, the calculation is $4,500 / $3,330 = 1.33 DSCR. Generally, >1 indicates positive cash flow, while <1 shows lower rental cash flow. We have lenders who can provide funding even for cash flows <1, depending on factors like equity, loan-to-value after cash-out, FICO score, etc.
Small Business Loan
An SBA loan is a business loan backed by the U.S. Small Business Administration. These loans can fund startup costs, expansions, real estate purchases, or other business expenses.
SBA loans are less risky for lenders due to the federal guarantee. However, you'll borrow from a bank or financial institution, not directly from the SBA.
Yes, SBA loans require a business plan. While other lenders might not need a formal plan, SBA loans typically offer long repayment terms and low interest rates, making them popular among entrepreneurs. The application process is often challenging and time-consuming. If approved, loans require a 10% down payment and may need cross-collateralization on other properties you own. Lender approval processes and guidelines vary and may change.
