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How to Get a Small Business Loan

How to Get a Small Business Loan

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 in the event that your company is unable to repay the debt, you will be responsible for doing so personally, even if your corporate structure might normally prevent such things. In addition, if you default, a lender may be able to seize your home or vehicle.

Understand the Terms

Start by comparing the loan conditions and annual percentage rates, or APR, of two or three options that are similar to each other. The best method to comprehend the whole cost of a business loan is to use the annual percentage rate (APR), which includes all loan expenses in addition to the interest rate.

Ready to Submit Your Application?

We’re excited to help Texas business owners succeed! If you’re ready to secure a business loan, don’t hesitate to reach out to one of our loan officers. We’ll be happy to discuss your options and to help you through the application process.

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