Alabama small business owners sometimes need a little push to keep them going. It’s there that small business loans can be useful: ideally, you are borrowing money to grow your business, and the increased profits or sales you get as a result will be greater than the interest and fees you pay. From there, it’s up to you 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 grow it so you can pass it on to your children. 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 answer.
Options for Small Business Loans in Alabama
With so many financing options available, it can be hard to narrow it down!
Coronavirus loans
Due to the negative impact the COVID-19 pandemic has had on so many Alabama businesses, there are now commercial disaster assistance resources available 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 exhausted, but they could possibly be renewed if the pandemic continues.
Long term loan
If you are looking for a larger sum to borrow, perhaps to refinance an existing loan or to expand your business, if you have excellent credit, you may qualify for a long-term loan from a credit union or credit union. a bank.
SBA loan
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.
Credit line
If a loan isn’t right for you, a line of credit might be better because you can access some of your funds now and some when you need them.
Credit card
Business credit cards can provide you with an easy way to buy office supplies and other things for your business, and if you get a card with rewards, you can earn perks on what you spend.
Short term loan
If you don’t have good credit, short-term loans offer a solution to help you get the capital you need, but beware: they have higher interest rates.
Invoice financing
If you invoice customers, invoice financing allows you to borrow against the value of 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 are eligible. Some criteria more than others indicate that a borrower is more likely to be able to repay that loan.
Credit ratings are one such factor. If your credit scores are high, this signals to lenders that it is likely that you will be financially responsible enough to repay the loan. If your scores are low, you may be considered more at risk.
Other factors considered by lenders include how long your business has been in business and your annual income.
How do I apply for a small business loan in Alabama?
Once you’ve found the financing option and lender that’s right for you, review their requirements for applying and gather what you need in advance.
If you’re 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’re applying for a bank or SBA loan, you may need to apply in person and provide more documentation, including financial statements, a business plan, and tax returns.
You don’t have a business plan? Do not worry. Alabama has 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 review 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 be doing business (or planning to do business) in the United States or its territories
- You must have reasonable equity to invest
- You must have already sought other financial resources, including personal assets
Do you need money to get a business loan in Alabama?
Although there are excellent 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 that if you have bad credit and are applying for secured loan. In this case, you will need to provide some form of collateral, which could be equipment, real estate or even, yes, cash.
And there may be fees when taking out a loan, but these are usually taken from the amount you borrow.
If a lender tells you you have to pay it 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 smart about money. Getting financing could help your business grow in ways you could never grow if you started.
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