If you’re a business owner struggling with cash flow or you’re looking to expand, consider small business financing. There are many options for business loans for $100k that may be open to your business. This article gives you great options for a $100,000 business loan, explains what you need to qualify, and answers common questions about this amount of funding.
The Best Business Loan Options for $100K
Finding financing options that offer $100K can be tricky. But you’ll be happy to hear that there are many types of loans that offer this lump sum.
Here are a few loan options we recommend:
How to Qualify for a $100K Business Loan
There are many small business loans that can get you funding to start a business, increase cash flow, or build up your inventory or equipment. To increase your chances of getting business loans for 100K, follow these 5 easy steps:
1. Build your credit scores
When deciding whether or not you meet eligibility requirements, a business lender will likely look at your credit history. They may look at both your personal credit score and business credit score, depending on their requirements.
Whether you have bad credit or good credit may help lenders decide whether you get the funding, and it can also influence the interest rate you receive. Typically, good credit scores mean you appear more likely to pay your debts, which can help lock in lower interest rates. Don’t miss Nav’s guide on how to establish business credit for everything you need to know on this subject.
2. Find the best lender
When choosing a lender, compare factors like interest rates, approval requirements, and monthly payment terms. Traditional banks often offer business funding like term loans, business lines of credit, or Small Business Administration (SBA) loans like the SBA 7(a) loan. These options may offer low interest rates and good repayment terms. However, keep in mind that bank loan applications can come with strict requirements and take months for approval.
On the other hand, alternative and online lenders often have faster online application processes. These lenders can provide similar types of loans, though you may find they offer you a higher interest rate.
If you find you can’t qualify for any of these loans, you can also look into business credit cards to fill in cash flow gaps and get fast funding.
3. Gather your documents
Business lenders usually state on their websites which financial or legal documents you need to apply. Depending on the funding type, you may need to provide your business’s financial statements, bank statements from a business bank account, or tax returns. Check with each lender to see what they need from you before you apply.
4. Create a detailed business plan
A business plan outlines your goals and what your small business needs to get there. Many lenders will want to see a concrete business plan before they will be willing to offer you funding. Essentially, they’re looking for a business direction and well-planned goals. If you need help putting your business plan together, take a look at Nav’s guide on how to write a business plan.
5. Offer collateral, if necessary
Some loans require you to put up a down payment or collateral. These loans are called secured loans. Whether or not you qualify for a secured or unsecured business loan depends on factors like your credit scores and your business income. Be ready to offer collateral if needed for the funding.
How Much Money Do You Need for a 100k Business Loan?
It might seem counterintuitive, but you sometimes need a down payment to get business funding. The good news is that this is rare. If you’re looking to get a $100K business loan, you may need to provide a down payment on the loan or to use as collateral. But not always.
On the other hand, you may be required to put down a personal guarantee or business assets as collateral on a loan. Putting down collateral can help you qualify for funding that you otherwise may not have.
Whether or not you need to provide a down payment depends on factors like:
- The type of funding. Business lines of credit and short-term loans typically don’t require down payments, but many SBA loans do.
- The loan amount. Lenders may require you to put down a percentage of the total amount of the loan as a down payment, like on a mortgage.
- Your business’s annual revenue and financial details. The more capable of repaying your debts, the less likely you are to find high down payment or collateral requirements.
- How you’ll use the loan. The purpose of the loan is often factored into whether or not you’ll need cash upfront before borrowing.
These factors can also influence your loan payments and repayment terms. If you are a strong lending candidate, you may get a lower annual percentage rate (APR) and be required to pay less each month.
Can a Startup Get Approved for a $100,000 Business Loan?
Even if you have a brand new business, it’s helpful to understand that there are start up business loans that may be available to you. You may have heard that lenders’ eligibility requirements focus on things like minimum credit score, time in business, and the annual revenue of your business. While this is true for some loan options, there are alternative lenders and options that could be a good fit for your startup.
One way to find small business funding fast is to create a free Nav account. Nav instantly finds the loans you’re most likely to get based on your business data.