Small Business Loans

Small business loans are loans made to businesses or commercial enterprises that have relatively few assets and generate modest revenues and income on an annual basis. For example, small business loans for women or minority small business loans would fall under this category. The type of business or commercial enterprise that qualifies as a small business and therefore, may qualify for a small business loan depends upon the lender, but usually is measured by various factors such as amount, value and type of assets owned, revenue and income generated, number of employees employed and years in operation. Because of the relative size of most small businesses, small business loans can be some of the most difficult loans for a business owner to obtain and most small business loans will require that the principal amount and interest of the loan be secured by the assets of the business and guaranteed by the small business owner personally. While a small business loan may be difficult to obtain and may require a business owner’s personal guarantee, they often provide small businesses with much needed capital that allows them to grow and expand without giving up valuable equity. In order to qualify for a small business loan a business owner needs to ensure that his or her small business generates enough cash flow to pay the interest on the loan, which will usually be payable at least monthly depending upon the terms. Small business loans can be obtained from various sources, including commercial banks, finance companies and government entities, such as the Small Business Administration.