To Top

How Much Working Capital Can You Receive with a Business Loan?

If you are about to start your entrepreneurial journey, you may want to avail of a business loan to fund your business. Business loans are one of the most common ways for entrepreneurs to receive financing and help them in laying their hands on a sum that’s more than what you can get from your friends and close ones. However, are you aware of how much working capital you can receive from a bank or any other lending institution?

What do you need to do if you need a million bucks? Can you step inside a bank and ask for it? In case you are not conversant with debt financing, it might not be easy for you to know about the factors that will determine your business loan amount. Read on to know how much you can receive with a business loan.

What Are the Factors That Determine Your Loan Amount?

Getting loan offers from two lenders is rare. Various lenders, such as online lenders, traditional banks, alternative lenders, etc. tend to evaluate different factors, apply different algorithms, and may emphasize more on various aspects of your business. In case you are keen on getting hold of the best loan possible. At the best reasonable interest rate, you need to work hard on different factors such as your business credit score, your credit score, how long you have been consistent in your business, and your business’s cash flow per month.

You need to submit your bank statements, profit and loss statements, balance sheets, personal and business tax returns, annual revenue, your income, business plan, industry type, and personal guarantee or collateral. The stronger you stand financially in your business and personally, too, the more likely you are to get a business loan.

How Much Can You Usually Receive as a Business Loan?

The sum you expect from a business lender depends on your gross sales figures that you attain every year. In addition to that, your existing debt and your credit score will also come into play. A business that reports an earning of $100,000 every year wouldn’t have the same financial requirement like the one that makes $10 million within the same period.

Lenders wouldn’t be willing to furnish a substantial sum of money on a business that doesn’t have an impressive credit history. Responsible borrowers are always preferred. The thumb rule of lending money is that lenders wouldn’t be giving out more than 10% to 30% of annual revenue. If you want to be eligible for more money, you have to make more money.

How Much Can You Receive from Every Lending Option?

All the lenders and their loan products are different in some way or the other. Business loans and business lines of credit usually net you more than business credit cards and short-term loans. Talking about the various lending options that you might have at hand, the bank term loans can help you avail of a business loan in the range of $5000 to $5 million. These are small business loans that have stringent requirements.

A business line of credit is an option that grants you a loan in the range of $10,000 to $1 million. Business LOCs or business lines of credit are quite identical to credit cards. With the short-term loan options, you can lay hands on an amount that lies in the range of $5000 to $500,000. If you require immediate funding, you can receive a loan on a short-term basis from an online lender. Business credit cards have a limit of almost $100,000. You can take out a fixed amount to compensate your expenses and repay your debt on a schedule that works in your favor. However, you need to keep in mind that you have to afford the interest payments.

Getting a business loan for small businesses is never easy as the banks are not confident of whether you will be able to sustain your business for long and repay the loan amount within the stipulated time. As stated earlier, your business credit score, your credit score, the monthly as well as annual cash flow will all be taken into consideration. If you come out with flying colors, you would gain the opportunity to propel in the right direction.

More in Loans & Mortgages

You must be logged in to post a comment Login

Leave a Reply