SBA 504 Loans

Business owners planning to renovate their commercial space can apply for an SBA 504 loan if they have a good credit score of above 650 and own the real estate property. The business funding can be used to modernize, remodel, or make additions to the building space as required.

Usually, an SBA 504 loan comes in three parts – 50% of the loan is offered by a lending institution like a bank, 40% of the amount is funded by an SBA-approved Certified Development Company, and the rest 10% is taken as a down payment by the borrower. SBA 504 loans generally come with a small 5% interest rate, and they can have a term of 10 to 20 years. What’s more, borrowers can also include soft costs of commercial remodeling, such as the fees of the general contractor, into the loan amount.

Bank Loans

Traditional bank loans are the next best option to SBA 504 loans. Business owners having a good credit score and a significant amount of equity in their business can apply for the loan and get it approved for competitive rates. Usually, the borrower would also be required to make a down payment of 20% to 30% to secure a traditional bank loan for commercial remodeling.

An equity loan or line of credit by a bank works quite similar to home equity loans and personal lines of credit. However, the difference here is that the loan would tap into the equity that the borrower has in the business. Entrepreneurs can also apply for secured lines of credit for commercial remodeling. Yet the terms and conditions might differ in this case depending upon the lending party.

SBA 7(a) Loans

An SBA 7(a) loan would be the most rewarding option for businesses that do not qualify for traditional bank loans. This is especially the case when a business owner is planning to renovate an office or industrial unit that is leased. SBA 7(a) loans are usually considered as general purpose working capital loans, but the funds can be used for renovation and remodeling of the business space as well.

Although most of the lending institutions hesitate to offer a commercial remodeling loan for a leased property, they would be more comfortable to approve the funding when it is guaranteed by the SBA. However, the borrower should have a good credit score and the ability to put at least a 10% down payment in order to qualify for the loan. Note that the more the down payment, the higher are the chances of getting the loan approved. The rates are more reasonable here, and the term can be up to 5 to 7 years.

Asset-Based Loans

An asset-based loan would work best for business owners who have a low credit score, and cannot qualify for an SBA-approved business funding for commercial remodeling. However, the borrower would still have to be the owner of the business property to qualify for the loan, as these are secured by commercial real estate. Besides, it also requires a larger down payment to qualify for asset-based or hard money loans.

Asset-based financing is generally more expensive than traditional bank loans and SBA loans, but they can have reasonable interest rates. Besides, the term to repay the loan amount can also be very flexible, but it would depend upon the lending party and their terms and conditions. An asset-based loan can be great for business owners who have an old facility and want to renovate it into a modern industrial unit.

Online Loans

Online loans and business lines of credit are the easiest to qualify for, but they can be very much expensive depending upon the lending institution. The lender usually does not put much emphasis on the credit score of the borrower here. Besides, there is no need for making a down payment to secure the loan either. However, lenders might require the borrower to agree to offer a general lien on their business assets to get the loan approved.

This business funding option can be the best thing for business owners who have a bad credit score as well as for new entrepreneurs who do not have much experience in managing a business. The funds are released very quickly here and it can be used for virtually any business need. The only thing to take note of here is to manage the scheduled payments sensibly, so that the business assets put as collateral are not seized because of default.

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Technically, working capital refers to the amount of money you have left after cashing in your assets and settling your liabilities within a period of 12 months. It is important that you have a positive working capital to keep the business functions up and running. Securing a working capital loan will ensure that you always stay in a better position financially and maintain the normal flow of your business operations.

Generally, working capital loans involve a shorter repayment term, which can range from three months to one year. This means that the interest accumulated on the loan would be much smaller than other traditional business loans. That is why working capital loans can be a great option for small businesses to make the most of during downtime.

Downtime can be experienced by any business at any time, so being ready for the hard times will always be a wise choice. This is especially true for seasonal businesses, such as those that make most of their income during the holiday season or any specific time of the year. A working capital loan can help such businesses manage their operations smoothly even when they are not making any sales.

Besides downtime, there can be many other financially tough situations where a working capital loan can help. For instance, if one of your biggest clients drops off or if you face some kind of a lawsuit, this can have an adverse effect on the financial state of your company. However, when you have positive working capital at hand, you can deal with such scenarios easily without having to run in all directions to get some business funding.

You can also use a working capital loan to pay off your short-term debts so that your business continues to stay in a healthy place. This will also help you to focus on the growth and expansion of your company. As your business capital remains positive with a working capital loan, you can have peace of mind and make thoughtful decisions to take help take your company to new heights.

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Generally, a working capital loan involves repayment terms starting as short as three months and can go for as long as one year. In addition, the interest rate can be higher when compared to other common business funding options because of how small the loan amount is. That being said, so long as the loan is repaid on time a working capital loan can be used to fund business operational costs again and again as per the needs of the borrower.

A term loan, on the other hand, features longer repayment periods ranging from one year to five years. These types of loans are usually designed to cover daily expenses and regular costs, as well as help to cover bigger investments that would, in turn, help the company increase its revenue. The loan amount here is usually determined based on the projected sales and returns on investment, and it can go as high as $5 million depending upon other criteria set by the lender. In addition, the common prerequisites involved in term loans, such as repayment method, need for collateral, interest rate, etc., vary depending upon the lending party as well.

Both of these loan types are suited for smaller businesses and startups that are finding it difficult to manage their regular expenses. However, it is important that you only apply for a working capital loan or a term loan when you are confident that you can pay off the debt in time without having to run into any cash crunch situation. For instance, you should never secure business funding only to pay off your bills or manage the inventory. Instead, it should be used to cover the cost of running your business so that you can have a stable revenue to repay the loan amount in time.

In general repayment amounts are lower when it comes to term loans, meaning that it can be easily managed when compared to working capital loans. Besides, you can also use the loan amount for a wide range of purposes, such as buying new equipment, launching a new marketing campaign, or securing an additional property, and in turn, leading to more revenue for your business. So in a nutshell, while working capital loans are great for minor expenses, term loans can be better for major expenses that can help deliver long-term results for your business.

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Protecting your Business against Lawsuits

• You need to be very cautious when making any public statements or doing any business that could be considered questionable. As you carry the business image wherever you go, your focus should be to avoid all kinds of slanderous comments, possible conflicts with competitors, as well as poor business practices. In fact, you should make sure that your employees also follow the same rules.
• You should talk to a reliable attorney as soon as you launch your startup and have them on your speed dial as a legal backup in case someone sues your company. It is recommended that you secure an attorney who is experienced in dealing with business lawsuits in your area and knows the local laws well in order to help your case. The attorney should also have a good track record of winning cases in court.
• Always keep your personal finances separate from your business assets and finances. This will ensure that no business lawsuit will affect your house or personal assets and that no personal lawsuit can affect your business operations. Instead of registering the company as a sole proprietorship, you can have a trust own the company or find a partner before launching your startup business.
• Secure liability insurance for your company. Liability insurance will protect your business from slip and fall lawsuits. That being said, you can also build protection into the company contracts to insure yourself against any liability. This can be helpful if any uncontrollable act, like negligence of a supplier, ends up affecting your business operations and breaches contract. You can also include all the probable clauses and legal phrases in the work contract in order to keep your business safe from any potential lawsuit.
• You should keep all the data stored on your computers secured at all times. It is mandatory for every business to implement robust strategies in order to secure the data on their systems, as any data loss can prevent workers from completing contractual work. While installing updated antivirus and anti-malware software can help to lower the risk of data loss because of a virus, you should also invest in having other security measures installed to avoid any sort of data theft.

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Protecting your Business against Lawsuits

• You need to be very cautious when making any public statements or doing any business that could be considered questionable. As you carry the business image wherever you go, your focus should be to avoid all kinds of slanderous comments, possible conflicts with competitors, as well as poor business practices. In fact, you should make sure that your employees also follow the same rules.
• You should talk to a reliable attorney as soon as you launch your startup and have them on your speed dial as a legal backup in case someone sues your company. It is recommended to secure an attorney who is experienced in dealing with business lawsuits in your area and knows the local laws well to help your case. Besides, the attorney should also have a good track record of winning cases in court.
• Always keep your personal finances separate from your business’ assets and finances. This would ensure that no business lawsuit would affect your house or personal assets and that no personal lawsuit would affect your business operations. Instead of registering the company as a sole proprietorship, you can have a trust own the company or find a partner before launching your startup business.
• Secure liability insurance for your company. This would protect your business from slip and fall lawsuits. At the same time, you can also build protection into the company contracts to insure yourself against any liability. This would be helpful if any uncontrollable act like negligence of a supplier affects your business operations, which breaches a contract. You can include all the probable clauses and legal phrases in the work contract to stay safe from any potential lawsuit.
• You should keep all the data stored on your computers secured at all times. It is mandatory for every business to implement robust strategies to secure the data on their systems, as any data loss can prevent them from completing contractual work. While installing updated antivirus and anti-malware software can help to lower the risk of data loss because of a virus, you should also invest in having other security measures installed to avoid any data theft.

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1. Loan Amount
   1. We specialize in small business loans from $10,000.00 al the way up to $500K, which is nearly 90% of what small business owners are looking for when reaching out for business capital. Make sure you aware of how much money your business is looking for, even if it is just a 10K small business loan.
2. Loan Type
   1. Line of credit, revenue-based financing, equipment funding or merchant cash advance, the list goes on an on, contact a professional today for a no-obligation consultation on how we can best help you fund your business.
3. Credit Rating
   1. Based on your credit score and business overall lending standpoint, we assess your business and score it as high as we can, from A-Paper to D paper. Our lending team is determined to get you funding and help your business grow and we will do our best to ensure you get an offer from some of our partners
4. Term of loan
   1. From as short as a 1-month term all the way up to a 5-year term, business loans vary wildly and are typically tailored to match the business and its needs to make sure our business owners are in the best possible financial scenario

To learn more about Fundygo business loans, contact a representative today!

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Preparing a solid business plan is the best way to estimate the costs, which you might have to bear in the future. It is recommended to prepare a business plan for at least 3 to 5 years, including financial projections such as the expected expenses and estimated revenue. After you have the details ready, see if you can manage the funds for the expenses or if you would can utilize revenue-based business financing to take care of the needs.

Keep in mind that it could take some time to generate a steady income, so taking cash out of personal resources to balance the business requirements might not be a good idea. Instead, it would be better if you consult with a financing company and explore the funding options for your business. Below are some of the common business startup costs that you should be aware of so that you can secure proper resources to meet them as applicable.

Equipment

The cost of equipment can vary greatly depending upon the type of your startup business. However, you can expect it to be somewhere around $10,000 at the minimum. The best option to deal with equipment cost is to avail an SBA loan or equipment financing.

Incorporation Fees

If you were planning to register your company to make it a corporate entity, you would need to follow the legal process to apply for the federal and/or state licensing or permits. This can incur incorporation costs anywhere between $50 and $300, depending upon the state’s laws and regulations.

Office Space

You can start small and rent an office space instead of buying a property to run your business initially. However, as you would need to spend a fixed amount per month to pay the rent, you should have a reliable resource to meet that requirement. Note that this can range from $100 to $1000 for each employee per month depending on the location and type of office space.

Inventory

If you were planning to start a wholesale, retail, distribution, or manufacturing business, you should have a clear idea of the inventory costs. It is advised not to stock too many products to start, but keep it good enough to meet your customer demands. You might need around 25% of the startup budget for inventory alone, which is why availing a separate inventory financing might be a good idea here.

Office Furniture 

If you were planning to start a services company that needs a typical 9 to 5 office environment, you would need furniture, such as desk and chair, for each of your employees, as well as furniture in the reception area. Although this would vary greatly depending upon the number of employees you are planning to hire, it is an important part of the business startup costs and should not be ignored at all.

Marketing

Promoting your business is quite simple these days with online marketing tools and social media. However, you might still need to spend around $100 to $250 per month on paid advertisements. Besides, you should also consider the costs of marketing materials like signboards and business cards when drafting the business plan.

Office Supplies

Office supplies such as computers, phone, filing cabinets, paper, and printer ink, etc., should also be included in the business startup budget. Although these seem to be minor expenses, the accumulated costs of office supplies can go anywhere from $100 to $1000. Usually, this would be around 10% of your total startup costs, but that would depend upon the number of staffs as well.

Utilities

No matter whether you own the building, or are operating from a rented space, you would need to pay the electricity, water, internet, and phone bills every month. You can estimate the cost of utilities based on the total area of your office space (excluding the internet and phone charges) at $2 per sq. ft.

Payroll

It might take some time to start generating revenue from the business. However, you should always have the proper resources to manage employee payroll from day one. Although the costs are based on the number of workers here, it usually comes around 25% of the total business startup budget.

Insurance

It is very important to protect your company with insurance. This would ensure that you do not have to face any great losses in case of an unfortunate event. The cost of insurance would depend upon the type of insurance you choose as well as the size of your business.

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