Understanding Business Bank Loans
Is it true that only the highly qualified need apply? In short, Yes. Bank rates are regulated by the Federal Government and strict internal guidelines for each bank make it difficult to get approved. The margins that banks have on lent money is tight, therefore when lending money to a small business must be a sure thing. As is, banks have troubled loans already out, this has created a sense of reluctance to lend more money.
What are Bank Business Loan Rates?
The rate on which a bank will lend your business money depends on a number of factors. One of the most important factors in the size of the loan: Loans under $100,000 incur a higher interest rate than loans above $100,000. Banks generally lend around 6 to 7 percent for loans over $100,000 and 7 to 8 percent on loans less than $100,000.
Would a bank fund my business type?
Some businesses are naturally riskier than others. A business than specializes in refurbishing antique bikes is probably a riskier endeavor than a pizza restaurant next to a college campus, right? Obviously banks want to feel confident that their money will be paid back and the likelihood that the business will afford the payback of the loan.
Is a bank lending to my business or me?
A bank is lending to your business, not you personally. But, a bank wants analyze your risk profile and understand what type of borrower you are. Remember, you will be personally guaranteeing any bank small business loan. A bank will look into your personal credit score, personal experience, current debt profile, assets and criminal history. Since you are the owner of the business, your business actions are directly related to your decision making and bill paying mantra therefor a bank wants to make sure they can trust you with your business and their money.