Similar to other businesses, a business established as an LLC can get a business loan. Before you get ahead of yourself though, you will need to make sure you qualify. Keep reading to learn more about LLC business loans for a new LLC or mature LLC.
As an LLC you can get a business loan. Before setting out to find the right LLC business loan you should do some research (and that’s probably how you ended up here). Through research and education, determine how much you can feasibly borrow - not only in terms of what you can afford to repay, but what you qualify for. You should also determine what kind of loan is best. For example, is a secured loan or unsecured loan better or do you just need financing for inventory or equipment. Before applying, familiarize yourself with what lenders will look at. To do this, visit mySMBscore. While it’s relative that lenders may consider your personal credit, your business credit history will likely be evaluated. At mySMBscore you can learn more about your business credit score as well as find lenders that can offer competitive business loans for your LLC.
It may be difficult to get a business loan with a new LLC since the company is not established. In fact, you may not have business credit history, among other key factors lenders look at to determine eligibility. Here are a few key items to consider since you have a new LLC:
As a new LLC, lenders may have a hard time offering a loan due to the unknown. Make sure you review the loan terms before signing since the interest rates may be higher than applicants with established businesses.
An LLC (Limited Liability Company) business loan is similar to other types of business loans, but is extended to an LLC. An LLC is a business structure that protects owners from business debt and liabilities. While some companies do not qualify to register as an LLC, it’s a rather common business structure.
LLCs may need business financing for many different reasons. Your reasoning can be unique to your situation and experience, but should be considered before taking on debt. Common needs for LLCs to require business financing can include:
Regardless of your need, MySMBScore is available 24/7 to help you gather the information you need to be a qualified applicant for an LLC business loan, as well as explore offers.
As an established business owner, you may already have some idea how LLC business loans work. LLC business loans work similarly to other types of business loans you already are familiar with. Depending on the type of loan you get, funds can be disbursed differently. Let’s compare an LLC line of credit with an LLC business loan and how they work to help you better understand.
Consider your needs and find out what you qualify for to determine what type of LLC business loan is best.
Lenders that offer loans will have requirements that need to be met. Although these requirements can vary, 3 basic requirements are as follows:
To better understand requirements and how your LLC can qualify, visit mySMB score.
The loan amount an LLC can receive can greatly depend on a variety of factors. The lender, the creditworthiness of the LLC, the needed funding, and inclusion of collateral can impact how much of a loan you can receive with an LLC.
With tools like mySMBscore, you can track your industry score based on your business's financial data and see the key lending metrics lenders can use to determine loan amount eligibility.
Similar to other business loans, having a higher credit score can increase an LLC's chances of being approved for a loan. High credit scores can also result in lower interest rates and better loan terms.
Become a more informed business owner with an LLC by reviewing your business credit score and key financial metrics from the lender’s perspective with mySMBscore.
Borrowing can impact credit score. In the beginning it may cause a negative impact, but with on-time payments, you can see positive impacts.
LLC businesses do have credit scores. Since an LLC is a separate legal entity from its owners, it can establish its own credit history and credit score. Just like with personal or business credit scores, an LLC's credit score is based on its credit history and payment behavior.
As you're reviewing your options and determining what options you qualify for, you might be curious if you can get an LLC business loan with not so great credit. So, it may be difficult to get an LLC business loan with bad credit. Having a low credit score can signify a higher risk for the lender, which may cause some hesitation.
If you happened to have poor credit, fear not. It certainly isn’t impossible to get an LLC business loan with bad credit. There are still options available.
As you initiate your search, you can utilize mySMBscore to view your business credit profile through the eyes of a lender. Plus, you can identify ways to improve the financial standing of an LLC to better qualify for a business loan.
When comparing LLC business loans, it's important to consider a variety of factors to ensure that you’re choosing the best options for your business.
Here are some hot tips to help you compare LLC business loans:
Yes, an LLC can get a SBA (Small Business Administration) loan. In fact, SBA loans are one of the most popular types of loans for LLCs and other small businesses.
To qualify for an SBA loan, your LLC must meet the SBA's eligibility requirements.
Note that, there are a variety of SBA loans with varying requirements.
LLCs can use personal loans, but it’s not typically recommended. When an LLC needs financing, it can be better for the LLC to obtain business financing rather than relying on personal loans. Using personal loans for business expenses can create confusion and make keeping track of business expenses and profits difficult. Not to mention, it can also create legal and tax issues, if not properly done. Avoid the headache and keep personal and business financials separate, as they should be.
There are different types of LLC business loans that are available from various lenders. Some of the most common types of LLC business loans include:
The borrowing needs of an LLC can depend on specific and unique circumstances. Some types of business loans can meet these varied needs better than others. Be sure to shop around and ask questions to find the best type the LLC.
As the name suggests, long-term business loans are designed to be repaid over an extended period of time. Some can be paid off between 5 to 20 years or more. With the longer repayment term, long-term loans typically have lower monthly payments compared to short-term loans, but this does not mean the cost is lower. Costs for the loan will vary so it’s important to compare offers and look at the total loan costs, not just the payments.
LLC business loans can be a good way for limited liability companies to obtain financing to support their growth and operations. Here are some pros and cons of LLC business loans:
Pros:
Cons:
To get a business loan for an LLC, you'll typically need to follow these steps:
Getting a business loan with a new LLC can be more challenging than getting a loan as an individual or a larger, more established business. LLCs have a limited financial history, higher perceived risk, and lower credit scores, which can greatly impact a lender’s decision to approve LLCs for business loans.
Despite these potential roadblocks, it’s still possible to get a business loan with an LLC. Some lenders specialize in providing loans to small businesses, including LLCs. MySMBscore is here to make the process easier. Our platform leverages AI technology to provide personalized recommendations about how to improve the financial position of your business in the eyes of a lender.
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