Business Loans

Small business loans work largely like any other type of loan. A lump sum of money is delivered to your business and can be used to cover a number of expenses such as new equipment, a new location, or even the money needed to open your business in the first place. After the money is delivered, regular monthly payments will be required until the balance of the loan is paid off.

These loans can come in many different forms, such as mortgages to buy new property for your business, loans to buy needed equipment, startup loans to get your business started, or even a flexible line of credit to provide a little extra cash whenever your business needs an influx of funding. Generally, these loans are taken out in the name of your business and not in the name of the owner or any individual employee, although this can change depending on each business’ distinct circumstances.

Small business lines of credit tend to be more flexible than standard loans, as they don’t offer as strict of a term or limit on what you can borrow or when. As opposed to a traditional business loan, where the entire amount of money is delivered upfront, a line of credit offers you a total credit limit that can be borrowed against at any time. Your repayment terms will frequently vary depending on how much of your credit is being utilized at one time, and you will have access to this credit until the limit is reached. This differs from standard loans, where the total amount of the loan is delivered upfront and the monthly repayments rarely, if ever, change.

Commercial mortgages are similar to standard home loans or mortgages, in that they are liens placed on a property to help purchase the property for use. The primary difference is that these mortgages can only be used for commercial spaces, such as offices, garages, or restaurant locations, as well as for construction or renovation on an existing space.

As a result, these mortgages are only available to certain types of businesses, such as LLCs or S-class businesses, and not individuals. While the application process and purchasing process may be similar, commercial mortgages cannot be given out to individuals, nor can commercial mortgages be used to purchase residential properties.

Small business loans have a lot of variety and flexibility in their terms, all depending on the type of loan in question. For example, many commercial mortgages or business real estate loans can have terms from 5-10 years depending on the amount of the loan and various other factors involving the business’ finances. Many loans for small businesses tend to have a term of 5 years on average, although this can change depending on the business’ unique circumstances. 

Business lines of credit stand out in this regard, as they tend to be reviewed annually more akin to a credit card instead of having a set term date like a loan does.

Small business loans can take many forms, and as a result the eligibility can change depending on the specific loan in question. Generally, small business loans are based on either your personal credit or business credit score, depending on if your business is already operating and/or has been around long enough to establish a business score. If you’re looking for a loan to start your business, then the loan you take will initially depend on your personal credit score, whereas loans taken out in the business’ name will depend more on the credit score of your business and a number of other factors. 

In short, nearly anyone can be eligible for a small business loan depending on a number of factors, but each financial situation will be different.

Businesses of all types can apply for business loans, including LLCs, sole proprietorships, and corporations, as long as the following requirements are met:

• You must be currently in business and operating for profit
• Your business must be considered “small” under SBA size requirements
• Your business must be an eligible type/industry 
   

While many business loans will have slightly different requirements depending on the situation, for the most part, small business loans will require information such as:

• Personal credit score
• Business credit score and/or cash flow
• Annual revenue or debt/service coverage ratio
• Industry
• Business size (current or proposed) 
• Business plan
• Collateral

You may be asked to provide these, as well as additional information, at the time of the loan application to ensure your information is processed smoothly. 
 

Whatever kind of small business loan you need, Genisys Credit Union can help take you through the process. Whether you’re looking to finally start your own business, or you’re the owner of an existing business looking for a little extra money, visit any one of our locations today to get started! 

(All business loan applicants must qualify for membership with Genisys Credit Union to be eligible.)