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Small business owners in Alabama sometimes need a little incentive to keep their business going. This is where small business financing can be useful: Ideally, you borrow money to grow your business, and the increase in profits or sales that you generate as a result will be greater than the interest and fees you pay. From there it is up to you to decide how high you raise your business!

How a Small Business Loan Can Help in Alabama

What are your dreams about your business in Alabama? Maybe you want it to flourish so you can pass it on to your children. Or maybe you want to open a second location. Hire employees. Expand your offerings.

All this costs money. If you don’t have one at the bank, a small business loan may be the solution.

Small Business Loan Options in Alabama

With so many funding options available, it can be difficult to narrow down the issues!

Loans for coronavirus

Due to the negative impact of the COVID-19 pandemic on so many Alabama businesses, there are now both federal and state disaster relief business resources.

At the federal level, we have a Payroll Protection Program (PPP) and an Emergency Loan (EIDL). Some of these loans can be forgiven if you qualify. The SBA has stopped issuing new PPP loans, but if that changes we will be sure to update this article.

At the state level was Coronavirus Relief Fund… Please note that funds are currently depleted, but they could possibly be renewed if the pandemic continues.

Long term loan

If you are looking for a larger loan amount, perhaps to refinance an existing loan or to grow your business, if you have excellent credit, you can apply for a long term loan from a credit union or bank.

SBA loan

Another option, if you have good credit, is a loan through the US Small Business Administration. It has many low-interest loan programs that can be used for things like real estate, equipment and working capital, as well as those specifically geared towards economic development.

Credit line

If the loan doesn’t quite fit, it may be better to use a line of credit, as you can access some of your funds now and more in the future when you need them.

Credit card

Business credit cards can provide you with an easy way to buy stationery and other things for your business, and if you get an awards card, you can earn incentives on your spending.

Short term loan

If you don’t have good credit, short term loans offer a solution to help you get the capital you need, but keep in mind: they have higher interest rates.

Funding accounts

If you bill clients, financing invoice allows you to borrow against the amount of invoices minus the commission.

How do I get a small business loan in Alabama?

Lenders consider various criteria to determine if borrowers are eligible for financing, and if so, at what rate they are eligible. Some criteria are more indicative that the borrower is more likely to be able to repay the loan.

Credit ratings are one such factor. If your credit ratings are high, this tells lenders that you are likely to be financially responsible enough to pay off the loan. If your grades are low, you may be considered a higher risk group.

Other factors that lenders look for include the length of time your business is up and running and your annual revenue.

How do I apply for a small business loan in Alabama?

Once you have chosen a financing option and a suitable lender, study their application requirements and collect everything you need in advance.

If you apply online, you most likely won’t need to provide more than a few details about your business, your annual income, and your Social Security number. If you are applying for a bank or SBA loan, you may need to apply in person and provide additional documentation, including financial statements, business plan, and tax returns.

Don’t have a business plan? Not to worry. Alabama has great small business resources that can help you, such as Alabama Small Business Development Center (SBDC)

Who is Eligible for SBA Loans?

If you are considering funding through Small Business Administration, please review the eligibility requirements first at SBA.gov

While some SBA loans have specific requirements beyond these, all of the following applies to SBA loans.

  • Your business must be profitable
  • He must do business (or plan to do business) in or within the United States.
  • You must have a reasonable equity capital to invest
  • You must have already looked for other financial resources, including personal assets.

Does it take money to get a business loan in Alabama?

While there are several good lenders, keep in mind that there are also lenders that will take advantage of you. Never lend money to get a loan. Caution: if you have bad credit and are applying for secured loan… In this case, you will be required to provide a deposit in one form or another, which can be equipment, real estate or even, yes, cash.

There may be fees when applying for a loan, but they are usually charged on the amount you borrow.

If the lender says you need to pay them before you apply, run. They don’t deserve respect.

Small Business Finance in the Greater Alabama

Whether your business is in Birmingham, Montgomery, or somewhere in between, be careful with your money. Getting funding can help your business grow in a way that you could never have grown if you downloaded it.

This article was originally written on June 15, 2021.

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