Not every business is a good fit for an LLC, but if yours is, you have some options when it comes to financing. In this post, we’ll cover the basic steps of getting a business loan as an LLC and help you identify financing options for small businesses so that you can start building your new venture with confidence.
Find the right kind of loan
When you’re searching for a business loan, it’s important to consider your options. Business loans are available from a variety of sources, including banks, credit unions, and online lenders. In addition to offering different rates and interest points (APRs), each loan type has its eligibility requirements that must be met before you can qualify. Most business loans are offered in the form of secured or unsecured loans—but knowing which kind is right for your needs is essential.
Get pre-qualified to understand your options and rates
Pre-qualification is a process that helps you understand your options and rates. It’s free, and it doesn't obligate you to anything. So it’s a great way to get an idea of what type of loan you qualify for—and how much they’ll cost. As per the experts at Lantern by SoFi, “Lender requirements vary across the board, and there are options for small business owners who may not have the strongest credit profile.”
Pre-qualification is just like it sounds: A lender gets a sense of what kind of financing you could qualify for before they start looking at any additional details about your business or other factors involved in getting the loan. The lender will ask for some basic information about the business and its financials, including whether or not there are any outstanding loans on the property (if applicable).
Explore lines of credit
A line of credit is a revolving loan that you can use when you need it and pay back either at the end of each billing period or in installments. To obtain a line of credit, you may be required to put up collateral (such as your home). Keep in mind that, unlike loans, lines of credit aren’t funded upfront. Instead, they are re-accessed as needed through the issuing bank or financial lender.
See if you can get a grant
Grants are a form of financial aid given to people and businesses based on their merit. Some grants are awarded to specific people or companies, while others are awarded to anyone who applies. Like loans, grants can be used by businesses that have already been established.
If you think you might qualify for a grant, start researching them now, so you’re prepared when it’s time to apply. Many grants require applicants to apply along with other paperwork before receiving funding—so start building your team now!
If you’re an LLC, a business loan can be a great way to fund your new venture. If you’re looking for funding, it may seem like all banks turn down loan applications from small businesses. However, the truth is that many banks are willing to help entrepreneurs in need of capital to grow their businesses by providing loans through a variety of programs.