Getting Started

Business funding refers to the various ways businesses can obtain capital to operate, grow, or manage cash flow. Unlike personal loans, business funding is designed specifically for commercial purposes.

Types of Business Funding:

• ●Loans (term loans, SBA loans)
• ●Lines of credit (revolving credit)
• ●Merchant cash advances (future sales purchase)
• ●Invoice financing (receivables-based)
• ●Equipment financing (asset-based)
• ●Revenue-based financing (percentage of revenue)

How It Works:

1. ●You apply with basic business information
2. ●Lender evaluates your business health
3. ●You receive an offer with terms
4. ●Accept and receive funds
5. ●Repay according to agreed schedule

Key Differences from Personal Loans:

• ●Often secured by business assets
• ●May not require personal credit check
• ●Higher amounts available
• ●Different qualification criteria
• ●Various repayment structures

There are many types of business funding, each designed for different needs:

Merchant Cash Advance (MCA)

• ●Advance on future credit card sales
• ●Daily repayment from card transactions
• ●Best for: Retail, restaurants, businesses with strong card sales
• ●Speed: Same day to 48 hours
• ●Credit requirement: Minimal

Business Line of Credit

• ●Revolving credit facility
• ●Draw and repay as needed
• ●Best for: Ongoing working capital needs
• ●Speed: 1-7 days
• ●Credit requirement: 600+

Term Loans

• ●Fixed amount with set repayment schedule
• ●Monthly payments over 1-5 years
• ●Best for: Large purchases, expansion
• ●Speed: 1-4 weeks
• ●Credit requirement: 650+

SBA Loans

• ●Government-backed, lowest rates
• ●Long terms up to 25 years
• ●Best for: Established businesses, real estate
• ●Speed: 30-90 days
• ●Credit requirement: 680+

Equipment Financing

• ●Specifically for equipment purchases
• ●Equipment serves as collateral
• ●Best for: Any equipment need
• ●Speed: 1-7 days
• ●Credit requirement: 600+

Invoice Financing

• ●Advance against unpaid invoices
• ●Based on customer creditworthiness
• ●Best for: B2B businesses
• ●Speed: 24-48 hours
• ●Credit requirement: Any

Welcome to business funding! Here's your step-by-step guide:

Step 1: Assess Your Situation

• ●Check your personal credit score (Credit Karma, etc.)
• ●Calculate your monthly revenue
• ●Note how long you've been in business
• ●Identify your specific funding need

Step 2: Understand Your Options Based on your profile:

• ●Under 6 months in business → Limited to some MCAs, personal credit
• ●6-12 months → MCA, some equipment financing, working capital
• ●12+ months → Most products available
• ●24+ months → All products including SBA

Step 3: Prepare Documents Gather these before applying:

• ●3-6 months business bank statements
• ●Government ID
• ●Proof of business ownership
• ●Voided business check

Step 4: Start Conservatively For first-timers, consider:

• ●Business credit card (builds credit)
• ●Small working capital loan (proves payment ability)
• ●Equipment financing (if needed—collateral helps)

Step 5: Avoid Common Mistakes

• ●Don't take more than you need
• ●Understand total cost, not just payment
• ●Read terms before signing
• ●Don't apply everywhere at once

Building Your Credit History: Your first loan is a stepping stone. Pay perfectly, and better options open up in 6-12 months.

The amount of funding you can get depends on several factors:

By Product Type:

Merchant Cash Advance:

• ●Typically 1x to 1.5x monthly card sales
• ●Example: $30K/month in cards = $30K-$45K advance
• ●Maximum: Usually $500K

Business Line of Credit:

• ●10-20% of annual revenue typical
• ●Example: $500K annual revenue = $50K-$100K line
• ●Maximum: $250K-$500K

Term Loans:

• ●Based on cash flow and time in business
• ●Often 10-25% of annual revenue
• ●Maximum: $500K-$1M+

SBA Loans:

• ●Up to $5M for 7(a) program
• ●Up to $5.5M for 504 program
• ●Based on project and ability to repay

Equipment Financing:

• ●Up to 100% of equipment value
• ●Sometimes more for soft costs
• ●Maximum: $2M+

Factors That Increase Your Amount:

• ●Longer time in business
• ●Higher monthly revenue
• ●Strong cash flow
• ●Good credit score
• ●Valuable collateral
• ●Clean bank statements

Factors That Decrease Your Amount:

• ●Less than 6 months in business
• ●Declining revenue
• ●Existing debt obligations
• ●Poor credit
• ●NSFs or overdrafts

Requirements vary by funding type, but here are the general criteria:

Universal Requirements:

• ●Active business entity (LLC, Corp, Sole Prop)
• ●Business bank account
• ●Government-issued ID
• ●Proof of ownership

Merchant Cash Advance:

• ●3-6 months in business
• ●$10K+ monthly revenue
• ●Active credit card processing
• ●No minimum credit score

Business Line of Credit:

• ●12+ months in business
• ●$100K+ annual revenue
• ●600+ credit score
• ●Consistent cash flow

Term Loans:

• ●12-24 months in business
• ●$150K+ annual revenue
• ●650+ credit score
• ●Profitability preferred

SBA Loans:

• ●2+ years in business
• ●Profitable or clear path to profit
• ●680+ credit score
• ●Collateral for larger amounts
• ●Detailed business documentation

Equipment Financing:

• ●6+ months in business
• ●600+ credit score
• ●Equipment quote/invoice
• ●Down payment (0-20%)

Invoice Financing:

• ●Creditworthy customers
• ●B2B invoices
• ●30+ day payment terms
• ●Verifiable work completion

Funding timelines vary significantly by product:

Same Day Funding:

• ●Merchant Cash Advance
• ●Some working capital loans
• ●Emergency business loans Requirements: Complete docs, morning application, clean bank statements

1-3 Days:

• ●Business line of credit
• ●Short-term working capital
• ●Revenue-based financing Requirements: Standard documentation, responsive communication

3-7 Days:

• ●Equipment financing
• ●Invoice factoring (initial setup)
• ●Term loans (alternative lenders) Requirements: Equipment quotes, invoice verification, underwriting

1-2 Weeks:

• ●Bank term loans
• ●Larger equipment deals
• ●Complex transactions Requirements: Additional documentation, committee approval

30-90 Days:

• ●SBA 7(a) loans
• ●SBA 504 loans
• ●Commercial bank loans Requirements: Extensive documentation, SBA approval, collateral evaluation

What Speeds Up Funding:

• ●Complete documentation upfront
• ●Clean bank statements (no NSFs)
• ●Quick response to lender requests
• ●Morning applications
• ●Simple, clear use of funds

What Slows Down Funding:

• ●Missing documents
• ●Recent overdrafts
• ●Complex business structure
• ●Questions about revenue
• ●Multiple existing loans

Documentation requirements vary by product. Here's what to prepare:

Basic Documentation (All Products):

• ●Government-issued photo ID
• ●Business bank statements (3-6 months)
• ●Voided business check
• ●Proof of ownership (LLC docs, EIN letter)

Merchant Cash Advance:

• ●Everything above, plus:
• ●Credit card processing statements (3-6 months)
• ●That's typically it!

Business Line of Credit:

• ●Everything above, plus:
• ●Business tax returns (1-2 years)
• ●Personal tax returns (1-2 years)
• ●Profit & loss statement

Equipment Financing:

• ●Everything above, plus:
• ●Equipment quote or invoice
• ●Equipment specifications
• ●Down payment (if required)

SBA Loans (Most Extensive):

• ●Personal tax returns (3 years)
• ●Business tax returns (3 years)
• ●Personal financial statement (SBA Form 413)
• ●Business plan
• ●Financial projections
• ●Collateral documentation
• ●Resume of owner(s)
• ●Lease agreements
• ●All business licenses

Pro Tips:

• ●Have documents ready before applying
• ●Use PDF format, clearly named files
• ●Keep statements current (within 30 days)
• ●Prepare a brief business description
• ●Know your use of funds

Understanding how credit inquiries work with business funding:

Soft Pull vs Hard Pull:

Soft Pull (No Impact):

• ●Used for pre-qualification
• ●Does not affect credit score
• ●You can see it, but creditors can't
• ●Most initial applications start here

Hard Pull (Affects Score):

• ●Used for final approval
• ●Temporarily lowers score (5-10 points typically)
• ●Stays on report for 2 years
• ●Only happens after you accept an offer

When Hard Pulls Happen:

• ●You accept a pre-approved offer
• ●Final underwriting stage
• ●Requesting actual funding (not quotes)
• ●SBA loan applications

Minimizing Credit Impact:

1. ●Use pre-qualification tools first
2. ●Ask lenders about their inquiry process
3. ●Apply to 2-3 targeted lenders, not many
4. ●Apply within a 14-30 day window (bundles inquiries)
5. ●Don't accept offers you won't use

Business Credit vs Personal Credit:

• ●Many business products check personal credit
• ●Some primarily use business credit bureaus
• ●MCA and invoice financing often don't check credit at all
• ●Building business credit reduces personal credit reliance

Products That Typically DON'T Check Credit:

• ●Merchant Cash Advance (focuses on revenue)
• ●Invoice Financing (focuses on customer credit)
• ●Some revenue-based financing