Small business loans

Today is one of the best moments in history for small businesses. They not only make up the overwhelming number of businesses in the United States, and account for over half of all employment, but they are the source of the greatest job growth in the United States. While most businesses usually start out small, some of them grow very fast and become quite large in a relatively short period of time. Some grow so fast they create enormous economic growth and create an incredible amount of jobs, but there’s always been a problem being a small business owner. That is when you have the need to grow it’s been hard to borrow money.

The difference today is offers are coming from everywhere. Direct mailings, emails, and phone calls from those wanting to lend you money. The problem is you’ve got to be aware and know where the offer is coming from as scams abound. As a small business owner, how can you tell what you’re being offered is a good and legitimate deal?

Today there are thousands of small business lending specialists representing thousands of organizations. Quite a few of them started in Silicon Valley during the tech boom to make it much easier for businesses there to borrow. Now they are spreading out across the US. Many of them promise that you can borrow money from them in as little as 10 minutes after completing an online application. The amount of money you can borrow runs from thousands to millions of dollars. Banks are trembling with fear because they have not adapted to making these quick loan decisions.

This new style of lending can be excellent for you as a small business owner, especially for those who are busy and absorbed by the day to day activities of their businesses. When you want to seize an opportunity now and have the ability to borrow money quickly that can be a really good thing. But haste can end up causing you serious problems. There is something you need to look out for when you’re going to borrow money as a business and you are getting solicitations over email, and you are getting mailings coming to you. By the way, I see these mailings regularly.

What is missing from those mailings? What’s lacking in the email solicitations? They never mention the terms of the loan. The information required by law to be disclosed to you as a consumer is not required as a business borrower.

There are reputable online lenders to businesses, and then there are un-reputable lenders online. A lot of the loans made from the quick decision lenders are based on how established your business is. If you’re funding a lot of your business expenses with credit cards often what you can do with one of these legit quick online lenders is borrow money at a rate below what you’re paying on your credit cards.

People who have never owned a business are not aware that most small businesses fund operations, when they have cash flow issues, by buying things on credit cards or even doing cash advances on them. It may be to meet payroll, pay rent, or whatever. It is an inefficient way but a quick one for a business to meet temporary cash flow needs. But now there’s this whole new wave fighting for market share. Unless you ask the right questions, some of these people will throw money at you, and you won’t find out about the massive interest rate until it is too late. Others will write you a note with a very affordable rate. Your job, before you request a loan and complete your application for a 10-minute funding decision, is to get the terms in writing before you sign anything. Ask questions. What fees are you going to be paying to originate the loan? What interest rate will you pay? Is there any prepayment penalty? What is the payment schedule? When will my first payment be due?

Acting too quickly without asking the right questions can set you back and harm you financially. It’s great to find money fast when you need it but it’s up to you to do your due diligence.

Jay Thompson is a Business Consultant with the CSU Bakersfield Small Business Development Center. The CSUB SBDC provides premium, one on one, no cost consulting to small business owners in Kern, Inyo and Mono Counties. For more information visit their website at http://www.csub.edu/sbdc.