Frequently Asked Questions

There are numerous business funding options available, each designed for different needs and situations:

• Term Loans: Traditional loans with fixed or variable interest rates and set repayment schedules.
• SBA Loans: Government-backed loans with favorable terms for small businesses.
• Business Lines of Credit: Flexible funding that allows you to draw funds as needed up to a set limit.
• Equipment Financing: Loans specifically for purchasing business equipment, with the equipment serving as collateral.
• Invoice Financing/Factoring: Advances based on your unpaid invoices to improve cash flow.
• Merchant Cash Advances: Upfront funding repaid through a percentage of daily credit card sales.
• Commercial Real Estate Loans: Specifically for purchasing or refinancing business properties.

The best option depends on factors such as your business's age, revenue, credit profile, and specific funding needs. Our platform helps you compare options from multiple lenders to find the right fit.

The amount you can borrow for your business varies widely depending on several factors:

• Business Revenue: Lenders typically want to see that your business generates enough income to repay the loan.
• Time in Business: Established businesses generally qualify for larger loan amounts than startups.
• Credit Profile: Both personal and business credit scores impact your borrowing capacity.
• Funding Purpose: Some loan types (like equipment financing or real estate loans) may allow for higher borrowing amounts.
• Lender Policies: Different lenders have different maximum loan amounts.

Business loan amounts can range from as little as $5,000 to $5 million or more. SBA loans can go up to $5 million, term loans typically range from $25,000 to $500,000, and lines of credit often range from $10,000 to $250,000.

For a personalized assessment of how much your business might qualify for, we recommend comparing options from multiple lenders through our BCS Top 100™ directory.

Whether you need collateral depends on the type of business financing you're seeking:

• Secured Loans: These require specific assets as collateral, which the lender can claim if you default. Examples include equipment financing (secured by the equipment) and commercial real estate loans (secured by the property).
• Unsecured Loans: These don't require specific collateral but typically have stricter qualification requirements, higher interest rates, and lower maximum amounts. Many online lenders offer unsecured business loans based on business performance and credit history.
• Partially Secured Loans: Some loans, like SBA loans, may require collateral to the extent that it's available, but won't necessarily be declined if you don't have sufficient collateral to fully secure the loan.

Even with "unsecured" business loans, many lenders require a personal guarantee, meaning you're personally responsible for repayment if your business can't pay. Some lenders may also place a general lien on your business assets, giving them the right to claim those assets in case of default.

If you're concerned about collateral requirements, our platform can help you identify lenders offering options that match your preferences and situation.

SBA (Small Business Administration) loans and conventional business loans differ in several key ways:

SBA Loans:

• Partially guaranteed by the federal government (up to 85%)
• Typically offer lower interest rates (usually 7-9%)
• Longer repayment terms (up to 25 years for real estate, 10 years for equipment)
• Lower down payment requirements (often as low as 10%)
• More extensive paperwork and longer approval process (1-3 months)
• Stricter usage requirements and more oversight

Conventional Business Loans:

• No government guarantee
• Generally higher interest rates than SBA loans
• Shorter repayment terms in most cases
• Potentially higher down payment requirements (20% or more)
• Faster application and approval process
• More flexibility in how funds can be used

SBA loans are often ideal for small businesses that might not qualify for conventional financing on favorable terms. The government guarantee reduces risk for lenders, allowing them to offer better terms to borrowers. However, if you need funding quickly or prefer less paperwork, a conventional loan might be a better option.

Popular SBA loan programs include SBA 7(a) loans (general business purposes), CDC/504 loans (major fixed assets like equipment and real estate), and SBA Microloans (smaller amounts for new businesses).

Personal loans are versatile financial tools that can be used for a wide variety of purposes. Common uses include:

• Debt Consolidation: Combining multiple high-interest debts (like credit cards) into a single loan with a lower interest rate.
• Home Improvements: Funding renovations, repairs, or additions to your home.
• Major Purchases: Financing large expenses like appliances, furniture, or electronics.
• Medical Expenses: Covering healthcare costs not covered by insurance.
• Wedding Expenses: Paying for wedding venues, catering, attire, and other related costs.
• Vacation Funding: Financing travel experiences and vacations.
• Moving Costs: Covering expenses related to relocating to a new home.
• Emergency Expenses: Handling unexpected financial needs.

Most personal loans are unsecured, meaning they don't require collateral. This makes them flexible in terms of how you can use the funds. However, some lenders may have restrictions on certain uses, such as post-secondary education expenses (where student loans would be more appropriate) or business purposes.

It's important to borrow responsibly and ensure that the loan purpose offers sufficient value to justify the cost of borrowing. Personal loans should generally not be used for everyday expenses or non-essential purchases that could be saved for instead.

Personal loans typically offer significantly lower interest rates compared to credit cards for most borrowers:

• Personal Loan Rates: Generally range from about 6% to 36% APR, with the average for borrowers with good credit falling between 10-15%.
• Credit Card Rates: Average around 18-24% APR, with some high-interest cards exceeding 30% APR.

This interest rate differential is why debt consolidation (paying off credit card debt with a personal loan) is one of the most common uses of personal loans. For example, if you have $10,000 in credit card debt at 22% APR and qualify for a personal loan at 12% APR, you could save thousands in interest over the repayment period.

Other key differences between personal loans and credit cards include:

• Fixed vs. Variable Rates: Personal loans typically have fixed interest rates and consistent monthly payments, while credit card rates are usually variable.
• Repayment Structure: Personal loans have a set repayment schedule with a defined end date, while credit cards are revolving debt with minimum payments that can extend repayment indefinitely.
• Borrowing Limits: Personal loans provide a lump sum upfront, while credit cards allow for continuous borrowing up to your credit limit.

The rate you'll qualify for on a personal loan depends heavily on your credit score, income, debt-to-income ratio, and the lender's specific criteria. Borrowers with excellent credit can often secure rates significantly below the average.

The primary difference between secured and unsecured personal loans lies in whether collateral is required:

Secured Personal Loans:

• Require collateral (assets that the lender can claim if you default)
• Common collateral includes savings accounts, certificates of deposit, vehicles, or other valuable assets
• Typically offer lower interest rates due to reduced lender risk
• May allow for higher borrowing amounts
• Often easier to qualify for with lower credit scores
• Risk losing your collateral if you fail to repay the loan

Unsecured Personal Loans:

• Do not require specific collateral
• Approval based primarily on creditworthiness, income, and debt-to-income ratio
• Generally have higher interest rates than secured loans
• May have lower maximum loan amounts
• Typically require good to excellent credit for approval
• No direct risk to specific assets, but default can severely damage credit and may lead to legal action

Most personal loans offered by online lenders and banks are unsecured. Secured personal loans are less common but might be an option if you're having trouble qualifying for an unsecured loan or want to secure a lower interest rate.

When considering between secured and unsecured personal loans, evaluate your comfort with risking assets, your credit profile, and the loan terms offered. Our BCS Top 100™ directory can help you compare both secured and unsecured options from top lenders.

The documents required for a loan application vary depending on the type of loan and the lender, but commonly include:

For Personal Loans:

• Government-issued photo ID (driver's license, passport, etc.)
• Proof of income (pay stubs, W-2 forms, tax returns)
• Proof of address (utility bills, lease agreement, etc.)
• Employment verification (employer contact information)
• Bank statements (typically last 2-3 months)
• Social Security number for credit check

For Business Loans:

• Business financial statements (balance sheet, income statement, cash flow statement)
• Business tax returns (typically last 2-3 years)
• Personal tax returns of business owners (typically last 2-3 years)
• Business bank statements (typically last 3-6 months)
• Business licenses and registrations
• Employer Identification Number (EIN)
• Business plan (especially for newer businesses or large loan amounts)
• Detailed list of business assets (for secured loans)
• Legal contracts, commercial leases, or franchise agreements (if applicable)

For SBA Loans (Additional Documents):

• SBA-specific forms (SBA Form 1919, 413, etc.)
• Business debt schedule
• Detailed business history and overview
• Resumes of all business owners
• Collateral documentation (if applicable)

Online lenders often have streamlined application processes requiring fewer documents than traditional banks. Many use digital verification systems that can access some of this information electronically with your permission.

We recommend gathering these documents before starting your application to expedite the process. When you select a lender through our platform, you'll receive specific guidance on their documentation requirements.

The loan application process timeline varies significantly depending on the loan type, lender, and your preparedness:

Personal Loans:

• Online Lenders: Application in minutes, approval decision often within hours, funding in 1-3 business days
• Traditional Banks: Application process may take longer (1-2 hours), approval in 1-7 business days, funding in 3-10 business days
• Credit Unions: Similar to traditional banks, though sometimes faster for members

Business Loans:

• Online/Alternative Lenders: Application in under an hour, approval decision often within 24 hours, funding in 1-5 business days
• Traditional Bank Business Loans: Application may take several hours to complete, approval in 1-3 weeks, funding in 2-4 weeks
• SBA Loans: Most time-intensive, with approval taking 2-3 months and funding 30-90 days after approval

Factors that can affect the timeline include:

• Completeness of your application (missing information causes delays)
• Verification processes required by the lender
• Complexity of your financial situation
• Loan amount (larger loans often require more thorough review)
• Need for additional documentation or explanation

To expedite the process, have all required documents ready before applying, respond promptly to any requests for additional information, and consider lenders known for quick processing when timing is critical.

Most lenders in our BCS Top 100™ directory provide estimated approval and funding timelines, helping you choose options that match your timing needs.

Many lenders now offer "pre-qualification" or "rate check" features that allow you to see estimated rates without affecting your credit score. Here's how it works:

Soft Credit Inquiries:

• Used during pre-qualification or rate check processes
• Allow lenders to view limited credit information
• Do NOT impact your credit score
• Only visible to you on your credit report, not to other lenders
• Result in estimated rates based on limited information

Hard Credit Inquiries:

• Occur when you formally apply for a loan
• Give lenders complete access to your credit report
• DO impact your credit score (typically a small, temporary drop of 5-10 points)
• Remain on your credit report for 2 years
• Multiple inquiries for the same loan type within a short period (usually 14-45 days) are often counted as a single inquiry by credit scoring models

When using our platform to compare lenders, we clearly indicate which lenders offer pre-qualification with soft credit checks. This allows you to compare multiple loan offers without accumulating hard inquiries.

Once you select a specific loan offer and proceed with a formal application, that lender will perform a hard credit inquiry. We recommend only formally applying for a loan when you're ready to proceed and have already compared your options through pre-qualification processes.

It's worth noting that the final rate offered after a hard inquiry may differ from the pre-qualified rate if the lender discovers additional information during the complete credit check and verification process.

Credit score requirements vary widely based on the loan type and lender. Here's a general overview:

Personal Loans:

• Excellent Credit (720+): Qualify for the best rates and terms from virtually all lenders
• Good Credit (680-719): Good approval odds with competitive rates from most lenders
• Fair Credit (640-679): May qualify with many lenders but at higher rates
• Poor Credit (580-639): Limited options, often with specialized lenders and higher rates
• Bad Credit (below 580): Very few options, may require secured loans or cosigners

Business Loans:

• Bank Business Loans: Typically require 680+ credit for business owners
• SBA Loans: Generally require 650+ score (though SBA Microloans may accept lower)
• Online Business Lenders: Some will work with scores as low as 500-550, but with higher costs
• Equipment Financing: Often available with scores of 600+
• Invoice Factoring: More dependent on your customers' creditworthiness than your own

It's important to note that credit score is just one factor in loan approval. Lenders also consider:

• Income and debt-to-income ratio
• Employment stability
• Business revenue and cash flow (for business loans)
• Time in business (for business loans)
• Collateral (for secured loans)
• Relationship with the lender (particularly for bank loans)

Our BCS Top 100™ directory includes lenders catering to various credit profiles, and we can help match you with options suited to your specific credit situation.

Yes, it is possible to get a loan with bad credit, though your options will be more limited and typically more expensive. Here are several approaches to consider:

Options for Personal Loans with Bad Credit:

• Secured Loans: Using collateral like a vehicle, savings account, or certificate of deposit can help you qualify despite poor credit
• Co-signer Loans: Having someone with better credit co-sign your loan can improve approval odds and rates
• Credit Union Loans: Some credit unions have more flexible credit requirements for members
• Specialized Bad Credit Lenders: Some online lenders focus specifically on borrowers with credit challenges
• Peer-to-Peer Lending: These platforms sometimes approve borrowers with lower credit scores

Options for Business Loans with Bad Credit:

• Invoice Factoring/Financing: Based more on your customers' creditworthiness than yours
• Merchant Cash Advances: Approval based primarily on business revenue rather than credit
• Equipment Financing: The equipment serves as collateral, reducing credit requirements
• Microloans: Smaller loan amounts from community organizations or specialized lenders
• Alternative Online Lenders: Some focus on business performance metrics over personal credit

Important Considerations:

• Expect higher interest rates, potentially 25% to 36% APR or higher
• Loan amounts will likely be lower than what's available to those with good credit
• Watch for additional fees that can significantly increase the cost of borrowing
• Verify that the lender reports to credit bureaus if you're hoping to build credit through timely payments
• Be wary of predatory lenders, particularly those advertising "guaranteed approval" or not checking credit at all

If time permits, taking steps to improve your credit before applying for a loan can significantly expand your options and reduce costs. Even a modest improvement in your score can make a difference in the terms you're offered.

Our platform includes lenders that work with various credit profiles, and we can help identify the most reputable options for your situation.

Improving your credit score before applying for a loan can significantly enhance your approval odds and help you secure better rates. Here are effective strategies, organized by timeframe:

Quick Improvements (1-3 months):

• Pay down credit card balances: Reducing your credit utilization ratio (ideally below 30%) can have an immediate positive impact
• Become an authorized user: If a family member with good credit adds you as an authorized user on their well-managed credit card, their positive history can boost your score
• Check for errors on your credit report: Dispute any inaccuracies with the credit bureaus
• Ask for goodwill deletions: If you have a generally good payment history with a creditor but one or two late payments, they might agree to remove these negative marks
• Request higher credit limits: If approved, this immediately reduces your utilization ratio (as long as you don't increase spending)

Medium-Term Strategies (3-12 months):

• Establish perfect payment history: Make all payments on time, as payment history is the single most influential factor in your credit score
• Pay down installment loans: Reducing your overall debt can improve your debt-to-income ratio
• Don't close old credit cards: Keeping them open maintains your credit history length and total available credit
• Use a secured credit card: If you have limited credit history, a secured card can help you build credit
• Try credit-builder loans: These specially designed products help establish payment history
• Limit new credit applications: Avoid multiple hard inquiries in a short period

Longer-Term Habits (12+ months):

• Maintain a diverse credit mix: Having different types of credit (revolving and installment) can positively impact your score
• Keep credit utilization consistently low: Even if you pay off cards monthly, high utilization reported at statement closing can hurt your score
• Monitor your credit reports regularly: Early detection of issues prevents them from causing long-term damage
• Practice patience: Negative items like late payments and collections have less impact as they age

For more detailed information on improving your credit score, check out our Credit Score Guide, which provides in-depth explanations of credit scoring factors and improvement strategies.

If you need funding before you can significantly improve your score, our platform can help identify lenders most likely to work with your current credit profile.