VIP Capital Funding has worked with top tier investors in the United States. Their aim is to allow small business owners to grow their business through funding as well as minimal paperwork. Sometimes the bank may reject funding certain businesses however, at VIP Capital Funding, they are willing to provide sufficient funding to kickstart or grow your business. Additionally, there are no upfront fees or prepayment penalties to provide an ease of mind for the business owners. They are already juggling with other costs in mind as such, VIP Capital Funding hopes to relieve that burden for business owners. There are financial offers working in VIP Capital Funding with 30 years of experience and knowledge that sets them apart from other firms. VIP Capital Funding aims to encourage more people to start their own business but it is understandable that it may not be as easy. It can be difficult where there are so many terms that sound foreign and there could be confusion. As such, they have compiled a business finance glossary to go over terms that we often see and explain it succinctly.
Bank Term Loan
Bank term loans are issued by various banks with a longer repayment period so as to allow the business to budget a smaller amount for the loan every month. The bank will provide a large sum of money upfront and it is on the business to decide how to spend and budget it. There are fixed interest rates that are set before the loaning process as well as the number of months that the business has to repay. These loans are often used by small businesses to pay for fixed capital like a factory, building or equipment. Small businesses often opt for bank term loans because they provide greater flexibility of repayments and lower interest rates. Additionally, the application process for the bank term loans are much simpler and less tedious than others.
A credit score indicates the level of credit risk you may have. This indicator is used to decide whether the investor or bank should give you credit or interest. With a higher credit score, you are able to receive loans more easily as compared to a lower credit score. Your credit score can be calculated by looking at your payment history and determining if you have been paying your bills on time or if you have the ability to pay back your outstanding balances. If there is a large outstanding balance, it is unlikely that banks would continue to invest in your company. These credit scores can be seen from credit reports that show all the payment history or loans taken up. It can tell if you have been sued or have declared bankruptcy before. With these credit reports, it determines how high your interest rate would be.
Small Business Administration (SBA) loans are loans given by the US federal agency that aims to provide opportunities for small businesses to thrive. SBA world with a group of financial institutions that are verified and stable to lend out money to small businesses. SBA helps small businesses by partially guaranteeing the loans these financial institutions give to small businesses. If small businesses are struggling to pay back their loans, SBA will cover them. They cover up to 85% of the loans if they are less than US$150,000 or up to 75% of larger loans. As such, to receive the SBA loan, it is not as simple since they are investing so heavily on your business. As a government body, SBA holds up high standards and would be extremely thorough and restrictive throughout the process. Your business plans would have to intrigue them as convincing them for funding may not be the easiest. There will be heavy documentation and requires a lot more time.
For more information about business funding, contact us at (888) 571-6521 or send us an email today!