Sometimes Alabama small business owners need a little push to keep things going. This is where small business loans can come in handy: Ideally, you borrow money to grow your business, and the increase in profits or sales you get from it will be more than the interest and fees you pay. . From there, it’s up to you to decide how far you take your business!
How a Small Business Loan Can Help in Alabama
What are your dreams for your business in Alabama? Maybe you want to keep it flourishing so that you can pass it on to your kids. Or maybe you would like to open a second location. Hire employees. Expand your offers.
All of these things cost money. If you don’t have it in the bank, a small business loan may be the solution.
Options for Small Business Loans in Alabama
With so many financing options available, it can be hard to narrow them down!
Due to the negative impact of the COVID-19 pandemic on so many businesses in Alabama, there are now commercial disaster assistance resources at the federal and state levels.
At the federal level, we have the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL). A portion of these loans can be canceled if you qualify. The SBA has stopped authorizing new PPP loans, but if that changes, we’ll make sure and update this article.
At the state level, there was the Coronavirus Relief Fund. Note that currently the funds are depleted, but they could potentially be renewed if the pandemic continues.
Long term loan
If you are looking for a larger amount to borrow, perhaps to refinance an existing loan or to expand your business, if you have excellent credit, you may be eligible for a long-term loan from a credit union or bank. ‘a bank.
Another option if you have good credit is a loan from the US Small Business Administration. It offers many low interest loan programs that can be used for things like real estate, equipment, and working capital, as well as those specifically designed for economic development.
If a loan isn’t quite for you, a line of credit may be better because you can access some of your funds now and later when you need them.
Business credit cards can provide you with an easy way to purchase office supplies and other things for your business, and if you get a card with rewards, you can earn rewards on what you spend.
Short term loan
If you don’t have good credit, short-term loans are a solution to helping you get the capital you need, but beware – they have higher interest rates.
If you invoice customers, invoice financing allows you to borrow against the value of the invoices, less fees.
How Do I Qualify For A Small Business Loan In Alabama?
Lenders look at different criteria to determine if borrowers are eligible for financing and, if so, at what rate they qualify. Some criteria more than others indicate that a borrower is more likely to be able to repay that loan.
One of those factors is credit scores. If your credit scores are high, it tells lenders that you will likely be financially responsible enough to pay off the loan. If your scores are low, you may be considered more at risk.
Other factors that lenders consider include how long your business has been in operation and your annual income.
How Do I Apply for a Small Business Loan in Alabama?
Once you’ve decided on the financing option and lender that’s right for you, go over their requirements for applying and gather what you need up front.
If you are applying online, you probably won’t need to provide more than a few details about your business, annual income, and social security number. If you are applying for a bank or SBA loan, you may need to apply in person and provide more documentation, including financial statements, business plan, and tax returns.
You don’t have a business plan? Do not worry. Alabama has some great resources for small businesses that can help you, such as the Alabama Small Business Development Center (SBDC).
Who is eligible for SBA loans?
If you are considering funding through the Small Business Administration, first check the eligibility requirements at SBA.gov.
Although some SBA loans have specific requirements beyond these, all of the items below apply to SBA loans.
- Your business must be for profit
- Must do business (or plan to do business) in the United States or its territories
- You must have reasonable equity to invest
- You must have already researched other financial resources, including personal property
Does it take money to get a business loan in Alabama?
While there are great lenders, be aware that there are also lenders who would take advantage of you. You should never give money to get a loan. The caveat is if you have bad credit and are applying for a secured loan. In this case, you will need to provide some form of security, which could be equipment, real estate, or even, yes, money.
And there may be fees with taking out a loan, but these are usually deducted from the amount you borrow.
If a lender tells you you have to pay them off before you even apply, run. They are not famous.
Small Business Financing in the Great State of Alabama
Whether your business is in Birmingham, Montgomery, or somewhere in between, be careful with money. Funding could help your business grow in ways that you could never have grown if you started it.
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