Whether you’re a startup, small business or a company looking to expand, supporting your growth at any stage of development relies on funds. Your company may very well be looking into applying for a small business financing loan. When deciding on these, it’s important to consider several key factors.
Looking for a local incentive that benefits your business while also promoting your location? The Alamo EDC’s Revolving Loan Program can help your business grow. Find out how by contacting us!
Business and Personal Credit Score
When deciding if a loan is the best course of action, first review your personal and business credit reports. Why? Not only could your business and credit affect your chances for approval, your loan can also require higher interest rates, payment structures and factoring fees. If your credit is too low, then review and try to improve your credit before moving forward with a loan application.
Collateral
If you pass a credit check, some loans will require collateral. According to Manta.com, “90% of loans less than $100,000 required some form of collateral.” Collateral is, defined by the Small Business Administration, as “an additional form of security which can be used to assure a lender that you have a second source of repayment.”
Commonly, collateral is property but also can be represented by deposits, equipment or business inventory. It’s important to take the time to consider the risks of defaulting on a loan and be realistic on collateral.
Purpose of Funds and Repayment
Lenders will not provide funds if a clear purpose for them is not stated. Having a reason for a loan is a given, but quite often, funds will be rejected if lenders do not fully understand where their money is going. It’s important to make sure that these funds are supported by the lender, which can include equipment, rental space, and hiring employees.
Also keep in mind that repayment terms are crucial. Your business could be paying monthly, weekly or even daily, and it should have a cash flow to repay the loan while still being able to operate efficiently.
U.S. Small Business Administration Loans
With numerous loans available for businesses, the U.S. Small Business Administration can help. Although a popular choice, SBA loans require business owners to determine if they qualify for approval first with lengthy paperwork and long wait times.
To help your business prepare for the SBA criteria, first look at the various SBA loan programs that would fit your business. Include business formation documents, lease agreements, income tax returns and financial and bank statements when applying online. The SBA loan is a great way for businesses to have lower down payments, longer payment terms and reasonable interest rates.
Local Incentives
Most local cities provide businesses with incentives or loans. These local incentives provide a win-win model for businesses looking to relocate and for the city to help encourage economic growth. It provides a low-cost alternative financing option that isn’t available through a bank loan.
Business in Alamo
If your business is looking for local incentives, then the Alamo Economic Development Corporation (EDC) can help. As the ecotourism capital of South Texas, our city enjoys a robust economy with high production and low living costs, allowing for unique opportunities for businesses and manufactures. Alamo also offers exclusive access to a diverse and international market area of 2.5 million people and numerous benefits for businesses looking to expand or relocate to the area.
Revolving Loan Program
Just one of the incentives that the Alamo EDC offers, the Revolving Loan Program is designed to assist small businesses and entrepreneurs by providing a low-cost, alternative financing option. The loan program works with the Loan Review Committee and is presented to the Alamo EDC Board for approval.
Tax Increment Reinvestment Zones (TIRZ)
Alamo designated up to $5 million for potential economic development incentives to finance improvements and promote development of a defined area. This initiative helps improve business outlook, encourages the local commercial environment and is aimed to facilitate higher levels of prosperity for business of all scopes and sizes.
Here to Help
With tips and local incentives, the Alamo EDC can assist your business efforts to overcome any hurdles. For more information on how we can help you reach the commercial success you’ve always wanted, contact us today at 956.787.6622.