Small Business Loans For Sole Proprietor

There are around 23 million sole proprietors in the United States. This makes it one of the most popular types of businesses. But, for small business owners, accessing the funds you need is critical. But where will I be able to get a small business loan from? There are alternative funding options for small businesses. Let’s look at some of the options that you might want to explore.

What is a Sole Proprietor?

A sole proprietor doesn’t have any separate existence from the owner. Because of this, the owner will be personally responsible for any expenses of the business. Often, these will be smaller enterprises. They might be started as a way of providing a second or third income stream.

There are a few reasons why you might want to consider becoming a sole proprietor. First, there often won’t be as many regulations to contend with. It will also be a lot easier to deal with at tax time. This will give you more flexibility.

What Determines Your Ability to Get a Loan?

There are a few factors that will determine how easy it will be for you to get a loan. These things can also influence the interest rate. The more likely you are to pay back the money, the lower the interest rate will be.

First, you’ll need to think about how long you have been running the business. People will feel more confident about giving money to a company that has a long history. Sometimes, there might be a minimum amount of time that you will have needed to be running the business.

Most lenders will want to look at the financial records. These will contain a wealth of valuable information. They can show the number of deposits you are making each month. This can give the lender a good idea of how successful your business is. This will also provide a chance to verify that your documents were correct.

They might also want to consider your credit history. Banks will place a lot of emphasis on this. However, most alternate lenders will be willing to provide poor credit business loans. Now that we know how your loan will be assessed, let’s look at some of the funding options that you might want to explore.

Bank Loan

When looking for a loan, the first thing that will come to mind is often getting a bank loan. This is the most traditional option. But it can also present a few problems. First, you will need to have good credit. This won’t always be possible. They will also require a lot of paperwork, which can take a lot of time to arrange. Because of this, it will often take a while for the loan to be processed. It can be a few weeks before anything will land in your account. Because of these factors, more small businesses are turning to alternative business loans. Let’s look at some of the loan options that you might want to explore.

Merchant Cash Advance

One of the most popular forms of support is a merchant cash advance. It can be the ideal way to get additional capital at short notice. In this case, the repayments will be a proportion of your future sales. Many business owners find this easier to manage than a larger payment. This flexibility ensures that you won’t have to risk the success of your business to pay off the loan. If approved, you will be able to access between $5,000 to $50,000. The money can be in your account in two to five days.

Unsecured Line of Business Credit

One of the most flexible funding agreements is an unsecured line of business credit. Once approved, you will be given a set amount that you can borrow. Whenever you need funds, you can access the line of credit. You’ll only pay interest on the amounts that you borrowed. Most lines of credit will be between $10,000 to $500,000.

Unsecured and Secured Loans

There are a few types of loans for a sole proprietor. First, you might want to consider an unsecured loan. This doesn’t require any collateral. However, as the owner of the business, you will be personally responsible if the loan repayments aren’t made. Generally, you will require a good credit score to be considered for this type of loan. It’s also possible that the lender might charge a higher interest rate, to compensate for the increased risk of default.

The other option is a secured loan. In this case, you will put up business assets as collateral. If the loan doesn’t get repaid, these assets can be seized by the lender. This is lower risk, so it will attract a lower interest rate. This can be easier to obtain than an SBA loan, though the repayment term will be shorter.

Depending on what option you choose, you can get between $10,000 to $500,000. Once approved, you should get the money within three to four days. Repayment will be based on your company’s revenue. If you make less money, the amount you’ll need to pay will go down. The repayments will never increase. This flexible agreement should make it easier for you to keep up with payments.

SBA Loan

Lastly, you might want to consider an SBA loan. This is backed by the government. Because of this, it is considered the gold standard of small business loans. However, you will need to fill out more paperwork before you can apply. There might also be some restrictions on what you can use the money for. Often, the SBA loan will need to be used for costs associated with expanding an existing business.

You will need to have two to three years of experience to apply. Approvals might take a little longer. You will often need to wait two to four weeks. Once approved, the money can be in your account within three to four months. You should be able to get between $125,000 to $10,000,000, depending on what you intend to do with the funds.

What Funding Arrangement is Best For You?

As we’ve seen, there are plenty of sole proprietor business loans for you to choose from. Which one will be best for you will depend on a few factors. First, you will need to think about the amount of money you want. You might also want to think about your business history. If you have been running the business successfully for a few years, you will often be able to get a better interest rate. But if you didn’t that’s OK, there are plenty of poor credit business loans to explore. Finally, you might want to look at the interest rates and the loan terms. This will ensure that you will be able to afford the repayments.

Contact South Florida Funding Group

Most of the businesses in the United States are sole proprietors. These are smaller organizations, usually run by the owner. But they still require access to funding and loans. Thankfully, South Florida Funding Group specializes in helping small businesses secure sole proprietor business loans. We want to work with you to find the best loan for you. To find out more give our team a call on 786-544-2700. We’ll help you get the funding you need.