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Understanding Small Business Loans

Small business loans support business owners when they are establishing, growing, or managing their enterprises. The U.S. Small Business Administration (SBA) estimates that there are 32.5 million small enterprises nationwide, making up a sizable portion of the American economy. Even while each one is different; they all have one thing in common: they all require business funding. Funding for small enterprises that are underfunded Many funding options are available for historically underprivileged firms, including those run by women, veterans, Black, Asian, Latino, and Native American business owners. Financing for women’s businesses Women who own their own enterprises are eligible to apply for grants or debt financing. The growth of women-owned firms has outpaced that of all American businesses in recent years. However, when women are given business loans, the average yearly loan amount is around 33% smaller than it is for males. Financing for minorities’ businesses Business grants and loans are options for capital for business entrepreneurs of color. Those who live in historically underrepresented communities confront more funding-related entrepreneurial challenges than their peers. Funds are allocated by institutions and lenders all around the United States to help minority-owned enterprises. Financing for veterans’ businesses Small business owners with a history of military service also have access to a variety of services and funding choices. Many veterans find it difficult to apply their military experience to civilian professions after leaving the service, so some opt to launch their own businesses instead. Veterans’ business loans are one of the secrets to success. Obtaining a small business loan Depending on the kind of business loan you’re looking for, the application process for small business loans varies. Equipment financing normally requires less paperwork than a business line of credit, while short-term loans typically have less paperwork than long-term loans. To increase your chances of approval, it’s still a good idea to have the following documents on hand in case they are required: Checklist for applications for small business loans Once you’ve decided that your business is capable of handling a loan, you should start gathering the appropriate paperwork for your loan application. Although the specific paperwork varies depending on the finance partner, it almost certainly consists of the following: REMOVE THESE USUAL SMALL BUSINESS LOAN MISCONCEPTIONS Applicants that are rejected frequently commit the error of submitting financial documentation and company plans that are insufficient or poorly thought out. When requesting a small businessloan, it’s critical to gather as much prepared information as you can. SHUT OFF YOUR LOAN After approval, the closing procedure is going over the paperwork that will decide the conditions of the loan you’ve chosen. Your interest rate and payback plan will be set down in a legally enforceable agreement called a business loan contract. Make sure you comprehend what the lender is asking of you and how these conditions will affect the financial viability of your company. All of the terms of the contract, including what happens if you make late payments or default, are accepted once you have signed. […]

How to Get a Small Business Loan

Partner with SouthStar Bank and connect your small business requirements with results. How to Get a Small Business Loan Looking to start or expand your small business? Finding the right business loan doesn’t have to be a challenging process if you do your research. After determining your business’ needs, contact SouthStar Bank. We’re a local SBA lender, and can help you find the loan that best meets your needs., Here are six easy steps to getting a business loan. Choose Your Loan Type Let’s start with how you plan to use the funds from the loan. SBA term loans are lump payments that are repaid over time. Depending on the need, these may be funded up front, or a short draw period may be utilized. Repayment is based on a fully amortizing loan.  These terms are based on the use of the proceeds. A traditional SBA loan offers a maximum borrowing limit of $5.5 million.  You’d want to use a traditional loan to fund large purchases or to fulfill the needs of a growing business by funding company growth. If your needs are shorter in term or possibly seasonal, you may consider a business line of credit, which can provide funds for recurring expenses. This is a flexible form of financing, allowing you to access capital as needed to pay for costs like payroll or unforeseen repairs.  Many business owners use these types of loans as a helpful safety net, as businesses can be unpredictable. Determine Your Eligibility. Are you a For-Profit business? Do you know and understand your credit score? While your credit score is not the only factor in the loan process, it is important to know and understand what is affecting your credit score. How long has your business been in operations? SBA loans are available to new businesses and to expanding businesses.  As your hometown lender, SouthStar Bank can help you evaluate your eligibility and the steps you might need to take to obtain the best business loan for your needs. Understand Your Finances Examine the financials of your company, particularly the cash flow, and determine how much you can afford to put toward loan repayments each month. Your total income should be at least 1.25 times your total expenses, which includes your new payback amount. Understand your balance sheet.  Where are you with your accounts receivable and accounts payable? Has your cost of goods gone up or down, and what?  What is your leading product or service? Knowing more than just the bottom line can really play a vital role in the type loan product best for your business. Choose Between a Secured or Unsecured Loan Loans for businesses can be secured or unsecured. A secured loan requires company collateral, such as real estate or machinery, that the lender can seize if you don’t pay back the loan. Risky as it is, putting up collateral might improve your borrowing capacity and lower your interest rate. Even unsecured loans often require a personal guarantee. This means […]

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