Traditional Bank Loans
Banks are the largest small business lenders and probably the first place you think about when getting a loan. They offer some of the lowest cost loans available, but it can be difficult to qualify. About 72% of small business owners who apply get rejected. Banks usually require strong personal and/or business credit scores, a personal guarantee, collateral, and healthy financials. Applying also takes serious effort and time. The whole process lasts about one to three months.
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What You Need to Know About Bank Loans
|Very low, fixed interest rates||Lengthy paperwork|
|Predictable monthly payments||Longer wait time|
|Helps build business credit||Requires strong credit|
|Professional banker relationship||Usually requires collateral|
|Available for many uses|
Best Uses for Bank Loans:
- Purchasing inventory
- Purchasing equipment
- Purchasing commercial real estate
- Acquiring other businesses
If you don’t need quick access to money, go for it! Bank loans offer some of the best rates available, but be prepared to put in serious time and effort. You’ll need good credit to qualify for the lower interest rates. Another plus is that going through a bank lets you build a relationship with the lender. They’ll have a vested interest in seeing you succeed and can be a helpful, long-term resource.
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