Business borrowing guide stage 4: Loans for established businesses

How to find financing when your business has cemented its position.

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It’s not only startups that need financing. If you’ve worked hard to establish your business and have had the ball rolling for some time, you still might find periods where cash flow fluctuates or times when you need to make a purchase or investment to increase your profits. This guide is for finding the right financing for those needs.

Our top pick: National Business Capital Business Loans

  • Min. Loan Amount: $10,000
  • Max. Loan Amount: $5,000,000
  • Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
  • Approvals within 24 hours
  • No industry restrictions
  • High approval rate
  • Startup financing options

Our top pick: National Business Capital Business Loans

Get a large business loan to cover your financing needs, no matter what the purpose is. Startups welcome with 680+ credit score.

  • Min. Loan Amount: $10,000
  • Max. Loan Amount: $5,000,000
  • Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.

How do you define an “established” business?

Established businesses are well past the startup phase and have found a position for themselves in the market. These businesses have an existing customer base and are earning a profit that has allowed them to expand their operations. The product or service these businesses offer has been tested and is in demand in the market.

Common financing needs for established business

Established businesses have different funding needs than startups or businesses in their early stages. Established businesses are already earning a profit, so the funds they’re looking for are usually to fund a new venture, invest in expanding their operations or ease cash flow fluctuations.

  • Cash flow. Each business has cash flow challenges at one time or another, and depending on the nature of the business, established businesses can go through periods of big fluctuations that affect their profitability.
  • Investing. The investment could be to refurbish your office space, develop a new product or expand your marketing activities. Established businesses need to be able to grow just as much as startups, and financing can help businesses achieve this.
  • Expanding. If the business is growing, owners might need funds to hire new staff, purchase new equipment or move to a new business location. Business expansion funds can also be used to purchase an additional store location.

What types of finance are available?

There are three main types of financing that an established business can consider using: debt finance, equity finance or funding from internal funds (business profits).

Debt financeEquity financeInternal funds/business profits
Where to find it
How much you can borrowUsually between $1,000 to $5,000,000However much the business can raise, can depend on valuationAs much liquid cash is available depending on profitability
How it worksYou pay the debt back over the loan term with fees and interestThe investor may hold part of your business or get a say in decision-makingYou withdraw the funds from your business account
  • You don’t give up control in the business
  • Established businesses are more likely to meet eligibility criteria
  • There’s a range of loan types available
  • You may be able to raise higher amounts than debt finance
  • You don’t need to repay the funds
  • Your business doesn’t take on debts
  • Investors may provide strategic benefits
  • You don’t give up any control in the business
  • You don’t need to repay the funds
  • Your business doesn’t take on debt
  • You may need to provide collateral as security for the loan
  • Business profits need to be used to repay the debt
  • Finding equity finance can be a slow and difficult process
  • You may be required to give up some control of the business
  • You may have conflicts with investors
  • You may not get all the funding you require
  • This will affect your business cash flow
  • If you experience a downturn you will not have the same level of cash to fall back on

Want a business loan for debt finance? Compare these top lenders

Updated January 18th, 2020
Name Product Filter Values Min. Amount Max. Amount Requirements
LoanBuilder, A PayPal Service Business Loans
Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
Customizable loans with no origination fee for business owners in a hurry.
OnDeck Small Business Loans
600+ personal credit score, 1+ years in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Efundex long-term business loans
2+ years in business, 620+ credit score, not a sole proprietorship or nonprofit, strong financial history
Financing for high-risk industries with transparent rates and terms.
Sheer Funding Business Loans
6+ months in business, 550+ credit score, $150,000+ annual revenue, eligible industry
Multiple financing options available for business owners with less-than-perfect credit scores.
National Business Capital Business Loans
Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
Get a large business loan to cover your financing needs, no matter what the purpose is. Startups welcome with 680+ credit score.
Kabbage Small Business Line of Credit
1+ years in business, $50,000+ annual revenue or $4,200+ monthly revenue over last 3 months
A simple, convenient online application could securely get the funds you need to grow your business.
LendingTree Business Loans
Varies by lender and type of financing
Varies by lender and type of financing
Varies by lender, but many require good personal credit, minimum annual revenue and minimum time in business
Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
Lendio Business Loan Marketplace
Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.

Compare up to 4 providers

How to compare business loans

It’s important to compare different types of financing and find the right one for you. Use the points below to guide your comparison:

  • Does it have a fixed term? Fixed term loans are a great option if you only want to borrow a lump sum and want to make regular repayments. If you aren’t 100% sure on how much you need to borrow, a line of credit might be more suitable.
  • How much will your repayments be? Business loan interest rates are calculated in a few ways. Find out how the lender will calculate your rate and also what ongoing costs apply to determine your repayments. This will help you compare a loan’s competitiveness.
  • What loan amounts are available? Lenders usually have a set minimum and maximum amount. Make sure the loan you need is within that range.
  • How quickly will you receive funding? Depending on why your business needs the loan, you may require funding by a certain date. Be sure the lender can get you the funds you need in time.

Useful financial guides

What fees and rates should I expect?

Each business loan product will come with a separate set of fees and a different type of interest rate. Here are some costs to watch out for:

  • Interest rate. The rate may be structured as a standard rate, that is, charged on your outstanding balance, or it could be a factor rate, which is a decimal figure that’s charged on your principal and doesn’t compound. Check whether the rate is fixed or variable, as well.
  • Upfront costs. See whether you will be charged an application or establishment fee, which will likely be a few hundred dollars.
  • Ongoing fees. These can be daily, monthly or annual fees and are charged as a cost for servicing the loan.
  • Late and default fees. If you fail to make a repayment on time, your direct deposit fails or you default on the loan, you will be charged a fee.
  • Other fees. See if you will be charged to repay the loan early or make additional repayments.

Six questions to ask before deciding on finance

How much do you need to borrow?

Depending on how certain you are about this amount, it may affect your loan type choice. If you need a significant amount of finance it may be worth looking into equity finance or a large line of credit. If it is a large loan amount, consider the debt your business will be taking on.

How will you repay the loan?

Will you use projected or actual business revenue? What will happen if your business experiences a downturn? These are the questions you need to ask and factor into your projections before you apply for the loan.

Do you have an asset to use as security?

This could be a real estate property, either residential or commercial, or it could be a vehicle. Offering security for the loan can lower your rate and let you borrow more.

How good is your business credit score?

You will have a personal credit file and a business credit file along with a business credit score. Each could affect whether you’re approved and the rate you’re ultimately offered.

Will personal and business credit files be checked?

Some lenders will need to verify your personal credit position as well as your business’s credit position. Make sure you will be able to meet the credit criteria for both.

Can you repay the loan early?

Your business may be in a position to repay the loan early, and doing so could help you save money on interest. Find out if this is possible without a fee.

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