LLC Small Business Loans—A Complete Guide
A Limited Liability Company (LLC) small business loan is slightly different from startup and regular small business loans. If you own an LLC, you will need to get familiar with this type of financing, especially if the startup costs and operating expenses drained your budget.
If you sign up for our platform, we will prepare a loan request letter for you in mere minutes.
How is the LLC small business loan different from traditional small business loans? The borrower is not the business owner but the LLC itself.
LLC business loans are available from plenty of different lending institutions, such as:
If your business doesn’t have a long and successful financial record, you must provide a personal guarantee.
The best small business loans for LLC are as follows:
- Bank loans
- Small Business Administration (SBA) loans
- Unsecured loans
- Invoice factoring
- Lines of credit
- Merchant cash advances
Though they might seem like an obvious choice, you should know that it is fairly difficult to qualify for these loans. Banks have stringent eligibility criteria for giving out loans, which means that you will have a lot of paperwork to fill out to apply. You will also wait a long time for your loan application to be approved and to receive funds.
SBA loans are offered by participating banks and credit unions. It is a popular choice for many LLCs as these loans are backed by the government, reducing the risk that a lender needs to take.
The greatest benefit of SBA loans is low monthly payments. The loan term is up to ten years, and you need to have a credit score of 600 or higher.
Unsecured loans do not require any collateral, but interest rates are typically higher than with other forms of LLC financing because the risk is higher for the lender. The best part about unsecured loans is that there is no risk to personal assets.
You need to have a credit score of 300 or higher. The loan terms are six months to two years.
LLC invoice factoring means that the lender pays you about 80% of the value of your unpaid invoices upfront. The lender provides the remaining amount after you collect the payments. They will probably charge you for the service taking about one to four percent.
The greatest benefit of LLC invoice factoring is that you can access funds that are tied up from slow-paying customers, but the downside is that you are placing customer relationships in the hands of a third party.
To qualify for this type of small business loan, you need to have a credit score of 530 or higher.
If you get a line of credit loan, you will be able to use the funds for all business-related expenses, and you will need to pay interest only on the funds you actually use. The downside of a line of credit loan is that there are penalties for late payments, such as a temporary spike in your interest rate.
To qualify for a line of credit loan, your credit score must be at least 300.
If you need a loan fast and are planning to return it almost immediately, a merchant cash advance (MCA) is the right type of loan for you. A merchant cash advance will provide a lump sum loan that is automatically paid back by drawing a percentage out of the business’s credit. The main benefit of the MCA is fast access to money, but you should keep in mind that if you don’t pay it back quickly enough, the interest rates will grow.
To qualify for MCA loans, your credit score must be 500 or higher.
In the table below, you can find the documents that are usually required when applying for an LLC loan:
|Balance sheet||This document lists what your LLC owns and owes|
|Profit and loss report||It shows:
|Cash flow statement||This document shows how money is flowing through your LLC|
|Detailed projections||Detailed projections show future:
|Account statements||An account statement outlines all your bank and credit card transactions|
|Debt schedule and repayment plan||You need it if you already have loans|
When applying for an LLC loan, you also need to submit a convincing loan request letter. DoNotPay can generate a watertight letter on your behalf and make sure that it meets all the requirements and stands out from all other requests. Our app will make sure that you don’t leave out any important document or a piece of information.
Subscribe to DoNotPay and follow the steps below to create your request letter:
- Access the Business Loan Request Letter feature
- Provide business financial statements
- Indicate the amount you want to borrow
- Upload all the paperwork
If you still have not found the right lender, our Find Online Business Loan Lender feature can help you out. Forget about searching for a lender on your own—DoNotPay will analyze the points of your loan request and present you with the best options.
Get Down to Business With DoNotPay
If your to-do list is getting longer by the day, we offer numerous solutions. You can focus on growing your business while we handle the endless administrative tasks.
Here are some of DoNotPay’s products and services that will assist your company tremendously:
|DoNotPay Feature||Our App Will|
|Register a DMCA Agent||
Navigating the business world can be overwhelming. If your paperwork is piling up and disputes keep emerging, start using our app and declutter your workday from numerous chores.
The world’s first robot lawyer can help you deal with the following:
- Breach of contract
- Chargeback scams
- Business loan applications
- Faxing and mailing
- Negative online reviews
- 83(b) election forms
- Self-certification with the Privacy Shield program