Bad Credit Loans

The recent credit crunch has caused banks and other traditional lenders to tighten their underwriting standards. Financing for start-up and small businesses has become more difficult to obtain. Now, more than ever, entrepreneurs have to be a little creative in seeking financing. If you are a business seeking financing here are few sources that may aid you in your search.

Angel Investor

Angel investors look to invest in businesses that return a higher profit than a traditional investment. Many angel investors are successful entrepreneurs who want to help other entrepreneurs get their business off the ground. Angel investors look for businesses which can successfully compete in an industry. Angel investors usually come at the stage of a business where some funding has been obtained but the business needs a significant amount more to get to the next level. Financing from an angel investor is usually expensive with costs ranging from 10 to 50 percent of a company’s equity.

SBA

The SBA assists in obtaining a loan by guaranteeing the loan you get from a bank. Many banks have SBA loan centers and the process may even be streamlined where you do not have to wait long for an answer. The SBA is not a direct lender. Banks are willing to fund the business because the SBA backs the loan in case of default. The SBA guarantees up to 85% of a loan, depending on the size, type and maturity of the loan. There are several different types of SBA loan programs available.

Community Express Loans

Community Express is administered through the SBA loan program and is available at various selected lenders. This loan program is for pre-designated geographic areas serving mostly low and moderate income individuals and start-up small businesses. The program also includes technical and management assistance. This assistance is designed to help increase the chances of success for the small business.

Micro Business Loans

This loan program provides small loans to start-up, home-based and micro-businesses. Entrepreneurs with less than perfect credit needing to start or expand a business may benefit from a micro loan program. The loan does not come directly from the SBA. The SBA provides low-cost loans and grants to intermediaries such as community economic development centers which redistribute the funds to qualified small businesses in the form of micro business loans. You can borrow as little as $1,000 up to $35,000 and loans must be repaid within six years.

Patriot Express Business Loan

The SBA has launched a new loan program for military service members, veterans and their spouses called the Patriot Express Loan Initiative. The Patriot Express Loan builds on the more than $1 billion in loans the SBA guarantees annually for veteran-owned businesses. The loan can be used to establish or expand a small business and the maximum loan amount is $500,000.

Social Lending

Peer to peer lending is not only for personal loans but can also be used for business loans. This type of lending matches borrowers directly with lenders, circumventing the banks. It is a great alternative to traditional banks’ stringent business loan requirements. With peer to peer lending, a typical loan could be funded by as many as 100 people, thereby increasing the chances your loan will get funded.

Friends and Family

Not surprisingly, more than 50% of all start-up costs for new entrepreneurs come from friends and family. America thrives on entrepreneurship and friends and family are a big source for start-up costs. If your credit is weak you may have little alternative but to seek a loan from a friend or family member. This form of lending has so evolved that there is now a website which will help you facilitate a loan between friends and family. www.virginmoney.com.

More resources can be found at: Business Loan Sources

Author: Lisa Phillips
Article Source: EzineArticles.com
Provided by: Guest blogger

The U.S. Federal Government is the nations largest provider of financial or monetary assistance for small businesses. Since 1953, the Small Business Administration (SBA) branch of the Federal government has helped many small ventures that have become household names today. The government considers small businesses very seriously. They realize their obligation to promote and develop these firms for the integrated development of the whole nation.

Small Business Administration:

The SBA does not directly offer grants to individuals for business expansion or start-up. For individual set-ups, it provides a wide variety of loan programs on easy pay back terms. However, the SBA does offer many types of grants programs indirectly to benefit small business entrepreneurs. SBA grants programs are specifically designed to expand and enhance those organizations that provide small businesses with technical or financial assistance. These monetary grants generally support state and local governments, non-profit organizations and intermediary lending institutions.

Small businesses can in turn avail the grants from these institutions. The entrepreneurs need to have a workable business plan and meet the required basic criteria to avail the loan or grant from SBA supported institutions. These funds can be then utilized to either set-up or expand the existing businesses. SBA has very special and easy terms to offer business grants to women entrepreneurs and members of the ethnic minority groups to help them become economically independent. This leads to numerous co-related activities and finally development of underdeveloped regions of the vast country. It brings about a social change and societal uplift.

Benefits of Grants from SBA:

A grant is a direct financial contribution made without any expectation of a repayment but with very specific expectations of the required outcome. These programs are designed to encourage and assist entrepreneurs in starting their own ventures. This promotes an economic development and integrates the individuals into the mainstream of American economic society. Organizations that give grants exclude for-profit businesses, but encourage small businesses to take their grants. The grants are readily provided after meeting certain basic criteria.

Women entrepreneurs are the largest beneficiarys of governments generosity for special encouragement. Federal grants are extended to those non-profit organizations that provide counseling, training and other technical support to women groups. The SBA runs special help centers and womens business centers to train the women technically. They give access to credit and capital, provide with government contracts etc as well.

Ethnic minority groups too are special beneficiaries of federal governments financial grants on easy terms. SBA runs a Minority Enterprise Development Program known as the 8(a) program. This helps the minority entrepreneurs to bag the government contracts for the utilization of their products.

Small business people or groups are very hard working and enthusiastic about their business. They spend quality time to develop it and stay in touch with their work, as they do not have too many people to help. Their businesses take precedence over their family, friends or even vacation plans. They stay in constant touch to avoid failure or any unprecedented disaster. This helps in successful maturation of their businesses after an initial set-up time.

Author: Alexander Gordon
Article Source: EzineArticles.com
Provided by: Digital Camera Information