What types of loans can I find on BFN?

BFN can arrange Personal Loans, SBA loans, traditional bank loans, business lines of credit, equipment financing, business acquisition loans, commercial real estate loans, refinancing and merchant cash advances.

Does my business qualify for funding?

In order to qualify for business funding, you will have to meet some minimum requirements. You must have operated your business at the same location for 12 months or more and you must provide anywhere from 3 to 6 months of bank statements. You may not have any outstanding bankruptcies or tax liens that are not on a payment plan. Certain types of industries are also ineligible.

If I have a poor credit history, can I still get funded?

Yes, possibly. The funding builds on the strength of your business and less on your own credit history. You can still qualify for a business loan even if you have been rejected for other types of loans or financing.

What determines how much business funding I can get?

There are many factors that go into how much business funding you can receive. Some of those factors include time in business, industry, and monthly sales volume. Most of the time an eligible customer qualifies for a Merchant Cash Advance that is on par with its monthly credit and debit card sales. So, for example, if you run $500,000 in credit/debit transactions every month, the amount of funding available typically falls between $500,000 and $700,000.

How are new businesses financed?

Startups make heavy use of personal equity and traditional debt, with over half using their own personal savings Census Bureau data show that employers made greater use of financing than did nonemployers, but also continue to rely on personal savings. Roughly 30% of new nonemployer firms and 7% of employer firms used no startup capital.

How do existing businesses finance expansion?

Existing businesses use similar financing vehicles as startups to finance expansion. Personal savings are the most common source of expansion finance, followed by reinvestment of business profits. The percentage of firms using expansion capital is much smaller compared with those starting new businesses.

How much capital do startups need?

Small businesses’ startup capital needs vary, and employer firms tend to use more than nonemployers. More than 43% of employer firms used over $25,000 in startup capital compared to only 12% of nonemployer firms. A relatively large percentage of both employers and nonemployer businesses used a small amount of startup financing (less than $5,000), and a sizeable share of both used no startup capital.

How important is credit card financing to small firms?

Credit cards are used extensively, but they represent only a small portion of total finance. A recent report by the National Small Business Association shows that credit cards were one of the top three sources of short term capital used by small businesses.2 However, the Census Bureau finds them to be of lesser importance for startup and expansion capital.

How do interest rates differ on conventional and alternative financing?

Interest rates on small business lending products vary widely depending on the duration of the loan and the credit history of the borrower. Because of the nature of some alternative lending products, such as loan terms as short as four months, these products tend to have higher rates than traditional bank loans. Rates on commercial and industrial bank loans have remained below 5% since 2009. Personal credit cards tend to have much higher rates, at around 13%. Alternative loan products can have annual rates from 15% for a 36-month peer-to-peer loan and up to 45% for a four-month institutionally backed loan.

What Is a Personal Loan?

A personal loan is an unsecured installment loan. Unsecured simply means the loan is not backed by collateral such as a home, boat or car. They’re typically available from a bank, credit union or online lender and like other installment loans are paid back in equal monthly payments with a fixed interest rate. Unlike credit cards, which tend to have high interest rates, personal loans have a fixed repayment term so often have lower interest rates, especially if you have good credit.

What Is a Personal Loan Used For?

Personal loans can be used for debt consolidation, home improvement, auto expenses, medical expenses, credit card payoff, small businesses, large purchases or anything else that life may throw at you. However, the most common personal loan uses are to consolidate high-interest credit card debt. Often when you take out a personal loan, you’re able to lower your interest rate, make one monthly fixed payment and save on interest by paying your debt off sooner.

How Do I Qualify for a Personal Loan?

Since there is no collateral, qualifying for a personal loan is ultimately determined by your credit history, income, other debt obligations, and monthly cash flow. While each lender varies, they typically look for a minimum acceptable credit score that falls within a range of 600 to 700+…At BFN, for example, you must have a minimum credit score of 660, and not surprisingly, the higher your credit score the more likely you are to receive lower rates.

Will Getting Prequalified for a Personal Loan Affect My Credit Score?

Much like looking for the right mortgage lender for you, you’ll want to compare offers from multiple personal loan lenders before locking in your choice. Most lenders perform a “soft” credit inquiry to show you pre-qualified offers. This allows you to compare each lender’s offerings without affecting your credit score.

What Documents Are Needed for a Personal Loan?

The main reason lenders ask for documentation is to help verify your identity and income. When documentation is needed, typically you’ll be asked to provide: Driver’s license or another form of identification Pay stubs and/or bank statements

What Is a Personal Loan with Collateral?

Most personal loans are unsecured, meaning they aren’t backed by collateral, like a house or car. Your ability to get a personal loan is based solely on your financial history, like your credit profile and income. Some lenders offer a personal loan with collateral, also known as a collateral loan when your credit history and income do not meet their minimum requirements. By offering collateral, you may be able to receive a personal loan with a lower rate or larger loan amount, depending on your situation.

How Much Can I Borrow and How Long Can I Borrow?

Depending on the lender and your personal financial situation, personal loans typically range between $15,000 and $50,000, with a maximum of $100,000 and repayment terms between 24 and 60 months. The higher your credit score and income, the more money you can potentially borrow.

Can I Pay Back My Loan Early Without Penalties?

When selecting your personal loan you will also choose a repayment period, typically in months. Should you choose to pay off your loan early, it’s important to note whether your lender charges a prepayment penalty fee. At BFN you will never be charged a penalty or additional fees for paying back your personal loan early.

Why Is My Personal Loan Interest Rate Higher Than My Mortgage or Auto Loan Interest Rate?

A secured loan on a mortgage or car loan is backed by the actual asset – in this case, the home or car, respectively. Therefore, if you fail to make payments and default, you are at risk of losing the asset. On the other hand, an unsecured personal loan has no collateral so the lender assumes the risk on your promise to repay.
It’s for this reason that unsecured loans have higher interest rates: They create a higher risk for the lender. “It’s important to remember that even with a higher interest rate, the total cost of a personal loan (Finance Charge) can be significantly lower than borrowing from home because the term is significantly shorter.

What Is an Origination or Success Fee, and How Much Is It?

An origination or success fee is a fee that covers the cost of processing a loan, and it’s charged after funding. Like all other loans, the amount of the origination fee varies from lender to lender.
BFN origination or success fee is 12% of the loan amount, and they are deducted from the loan after the funds are distributed to your bank account. For this reason, make sure you borrow enough money for the loan amount you need and enough to cover the origination fee. There are a lot of things to consider before you apply for a personal loan. The most important, however, is making sure you don’t borrow more than you can pay back. If you’re ready to apply for a personal loan, talk to an expert at BFN today about your goals for taking out the loan and to see how much you qualify for.
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