What You Need To Know About Guaranteed Small Business Loans
Businesses face various financial difficulties, which is why they often need to take out business loans to cover their costs. Choosing the right loan for a small business can be difficult, especially with countless options to choose from. A guaranteed small business loan is one of the many viable choices, but not many people understand how it works.
In this article, we will explain what it means to have a “guaranteed” loan, how many types of guaranteed loans are available, and how to use our product to:
- Write a compelling loan request letter to boost your chances for loan approval
- Find top lenders in a matter of minutes
A guaranteed small business loan is a type of funding that has a payment guarantee in the form of agreement, collateral, or deposit. This means that even in the scenario where the borrower has no budget to repay their debt, the lender will still receive repayment.
When it comes to guaranteed loans, you have two options to consider:
- Personal guarantee loan
- Small-Business-Administration-guaranteed loan
Personal loans use personal assets such as real estate, cars, or saving accounts as guarantees. These types of loans can be categorized as follows:
- Limited guarantee—The lenders can only collect a percentage of the guaranteed assets. This type of personal loan usually has multiple borrowers who can pay a portion of the debt, lowering the burden of defaults
- Unlimited guarantee—The lenders can collect the entirety of the assets to recover outstanding debts
An SBA loan is a type of financing that is supported by the federal government but offered by independent lending institutions (such as banks or credit unions).
This small business loan works by having the government pay a percentage of a loan if you, the borrower, are unable to repay it. The policy is called a guarantee, and the amount it covers depends on the loan program you choose.
For most SBA loans, the percentages are as follows:
- 85% of the loan if the borrowed amount is less than $150,000
- 75% of the loan if the borrowed amount is higher than $150,000
|Program||Purpose||Maximum Loan Amount|
|SBA 7(a) Loans||A loan that supports working capital, equipment purchase, and business expansion||$5 million|
|SBA 504 Loans||A long-term loan for major fixed assets that support facilities, land, and machinery||$5 million|
|SBA Express Loans||Fast financing for real estate, equipment, working capital, and business expansion expenses||$350,000|
|Microloans||Loans for machinery, equipment, inventory, supplies, and other working capital||$50,000|
|SBA Community Advantage Loans||Loans issued by mission-based or nonprofit organizations to support economic development. This loan cannot be used in revolving credit agreements||$250,000|
|SBA Disaster Loans||Funding to help various businesses and nonprofits repair or replace business and personal property that was destroyed in disasters||$2 million|
- At least two years in business
- Promising yearly revenue
- Good to excellent credit scores (over 690)
- Adequate collateral (when applicable)
- Business tax returns
- Personal financial statement
- Business license
- Business financial statement
- One-year cash flow forecast
- Loan request letter
The lender of your choice may take a while to approve your application. If you apply in a bank, the entire process can take up to 30 days or more.
Even if you meet the requirements, your loan request letter may still be rejected if it is not convincing enough. This is why you should rely on DoNotPay to get an error-free and compelling loan request letter.
To use our app, you should:
- Locate the Business Loan Request Letter feature
- Prepare your credit scores and relevant business statements
- Answer the chatbot’s questions and upload the documents
We will create and send your letter in a matter of minutes!
The SBA loan application process is tedious enough—you do not need to waste more time looking for a lender. With DoNotPay, you can find reputable lenders in just a few clicks, as follows:
- Choose the Find Online Business Loan Lender feature
- Complete the form with your business details and loan requirements
- Set your business type and industry
You will receive a list of numerous lenders ranked based on interest rates, speed, terms, and loan amounts.
The business world is extremely competitive—that is why it is always good to have some extra capital set aside when you need to invest in your company. You can leave the bureaucratic task to us—DoNotPay will draw up business loan request letters in your stead.
If your finances are taking a hit, rely on our app. With our assistance, you will be able to:
- Fight fraudulent chargebacks
- Remove fake negative reviews online
- Register and protect your trademark
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Whatever the task at hand, our AI-powered app will see it through successfully.
You cannot escape bureaucracy in business. What you can do is let DoNotPay deal with it. Whether you need to register a DMCA agent or complete an Employer Identification Number (EIN) registration, our app will lead the way.
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