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Strategies For Securing Small Business Loans

If you need help securing small business loans, what’s the first thing you should do? Head to the bank? Post on Kickstarter? Go on ABC’s “Shark Tank”?

In a world where the finance industry has developed a product to take advantage of many well-meaning entrepreneurs (i.e., “the business cash-advance”), where companies promise you funding within five days and use complicated terminology such as “factor rate” to put you in a bind, securing small business funding by small business loans leads has become more confusing than ever. These business cash-advance companies often charge an interest rate of 1.30-1.40. Some small businesses are securing capital with a very high-interest rate over a 6-12 month period. Entrepreneurs unknowingly enter these deals just to see their precious profits transferred to a financing company.

Luckily, a few little-known ways to secure financing are much more strategic. And because these strategies are not as well known, you won’t have as much competition as you would in more conventional circumstances and know how much business line of credit you need.

Creative Loan Structures for Small Business Owners 

Entrepreneurs regularly want to ask people to invest in their businesses and give them equity. But in today’s economy, many people feel like equity has as much value as toilet paper. They really can’t do anything with it unless the company exits. And if the company isn’t that profitable, its annual profit share is just a fraction of its investment.

Your company has to do extremely well for investors to get a significant ROI. Many people don’t have the stomach for it. If you’re already in revenue or will be in revenue soon, offer a revenue share to pay them back. For instance, if you want a $10,000 loan, offer a 2 percent revenue share at a payback of 20 percent. This means you give them 2 percent of your revenue until they’ve been paid back $12,000. It’s a great ROI for them. You haven’t given up equity, and they’ll feel more comfortable because they get monthly checks.

No investor likes sweating bullets to get paid in a world where VCs, angel investors, and private equity firms are steadily increasing their standards as they are pummeled with potential deals. This creativity isn’t only good business sense — it will become necessary. If a small business owner goes to a bank seeking a loan, the bank often won’t issue a loan without a life insurance policy.

Finding The Ideal Solution

Brian Greenberg, CEO of True Blue Insurance, explains why having term insurance is advantageous for small business owners. He says, “I have seen business owners struggle to qualify for insurance and pay a huge premium to secure much-needed business loans. If business owners already have term insurance, they can use it to secure small business loans or construction loans whenever the need arises. When business owners have a large policy, they can simply assign the required benefit to the loaning bank to get the loan.” Understand that entrepreneurship is a full-time job. Because you have a great idea doesn’t mean you need to walk off the plank and yell “Geronimo!” into the deep blue ocean with no life raft. Yes, entrepreneurship is a journey of faith and boldness; however, most strategic individuals are still prudent.

Meisa Bonelli, the Managing Partner of Millennial Tax, a firm that specializes in helping new solopreneurs and home-based business owners, finance their ventures through tax savings with a compliant tax strategy, used her savings and tax-savvy to make the leap from employee to a business owner. When Meisa started her first business, a vacation rental business in New York (pre-Airbnb), she did it with savings and recouped her investment through tax refunds. This type of strategy requires a formal plan and diligent record-keeping. This is important in case a tax authority ever audits you.

Secure Your Loan Now

Finally, if you are in a situation where you have funds held hostage in your accounts receivable, the solution is BitX Funding. We analyze funding sources to help you get the best lending terms available. We offer the most reasonable rates in the entire industry. You’ll be able to talk to them without feeling like you are selling your soul. Business is hard, and accessing capital isn’t easy, but it is possible. BitX Funding has been helping small business owners secure loans and lines of credit for years. To join the ranks of those who have benefited, contact us now or fill out the application below and start the process. Your funds are waiting.


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