The question of “How do small business loans work” is the natural question when deciding on growth possibilities or starting a small business. 

Maybe you’ve come up with that product that has the market beat. Or, maybe you need a piece of equipment that would tip your business’s growth over the top. Or, maybe outstanding invoices have you in need of funds for operating costs. Whatever it may be, it may be time for a loan.

How Do Small Business Loans Work?
How Do Small Business Loans Work?

What is a small business loan?

So, what is a small business loan? Simply put, a small business loan is any funding option specifically designed for a small business.

Are small business loans a good idea? 

Small business loans are designed specifically for the small business owner. So, minimal requirements, friendly qualifications, and flexible terms make a small business loan a great idea for the growth-minded business owner.

What Are The Requirements?

Quite often, this is the next question after “How do small business loans work?” Loan types have different minimum requirements that borrowers need to meet. And they all come with special requirements for documentation. Your advisor at ROK Financial will explain all of the requirements. But, approval and lending can happen as fast as one day with some types of loans.

How Hard Is It to Get Approved 

A small business loan is easier to obtain than you might think from a lender like ROK FInancial instead of a bank. There’s minimal paperwork involved and you do not need a perfect credit score.

A small business loan application can include such pertinent information including how many years you’ve been in business, your credit score, and your gross annual income. These are the mainstays that every firm will start with to assess your application.

ROK Business Financing Officers will work hard to find the right loan with the right specifications for you!

Business Financing Options and Loan Types 

There are many business loans on the market and it can be beneficial to go over them by type.

Term Loan – A standard bank-type loan. You receive the funding and pay off the principle plus interest over time.

Equipment Financing – An excellent way for a growing business to get an edge. You receive the equipment upfront and pay it off over the life of the equipment.

Accounts Receivable Financing – If you have large amounts of outstanding invoices, you can borrow against them. The invoices act as collateral and AR Financing offers lower rates.

Merchant Cash Advance – A merchant cash advance is borrowed against future credit card sales. A borrower then pays back a percentage of daily CC sales to the lender. So, you never have to see the payments!

Business Line of Credit – A business line of credit works just like a non-physical credit card. The owner of a small business is extended a line of credit and is charged the interest only or what is spent.

Alternative Financing 

Of course, there are alternatives to standard lending. And yet another answer to “How do small business loans work?”.

Small Business Administration Loan – An SBA Loan is a business loan partially guaranteed by the government. Although there is a longer application process, this is an excellent option for any small business owner to investigate. In most cases, with an SBA loan the borrower can enjoy better terms, lower interest, a higher dollar amount if needed, incredible rates, and low risk.

V.A. Business Loan – Small businesses of returning veterans have a marked impact on the economy. If you or your spouse served our country in the military and would like to fund a small business, there are several advantageous loans available for veterans.

Talk to a ROK Financial Advisor to see if one of these loans would be a benefit to your small business.

Business Loan Repayment Terms 

The options on loan repayments are infinite which is another reason why a small business loan is an excellent option for your small business.

To calculate an estimate of monthly loan repayment options, visit a business loan calculator. Here you can enter the amount you want to borrow, the interest rate that you for which you are calculating the loan, and the length of the loan. 

Then you’ll be given an estimate of what a particular loans repayment cycle looks like. Not all loans are paid back in the same manner, so talk with your ROK Financial Advisor about repayment plans that work best for you.

4 Simple Steps to Apply 

Applying for a loan at ROK Financial couldn’t be much easier. Our streamlined processes and strong relationships allow ROK Financial to process hundreds of transactions per month resulting in hundreds of millions of dollars distributed to small businesses every month.

  1. Complete the application for Small Business Loans with some basic information to see which financing options you qualify for and to be paired with a Business Financing Advisor.
  2. Your Business Financing Advisor will contact you within 24 hours.
  3. Tell them how they can help you find the right loan for your small business needs. Your Business Financing Advisor will work to find the best loan for you
  4. Get approved in as little as 24 hours and receive funds in 1-3 days.

So, How Do Small Business Loans Work? 

Let the professionals at ROK Financial show you all the options for the optimal small business loan for your small business. With flexible loan types and repayment schedules, there’s bound to be a loan for you.

The first step is to apply for one of our small business loans by filling out the quick application. And let ROK Financial help you from there!

About the Author, Madison Taylor

Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.