An LLC loan offers more flexibility than other types of loans, so if you are looking for the best financing options and lenders for 2023 as a business owner, you’ve landed in the right place!
With a loan, you can start or expand a business, make equipment purchases, make real estate acquisitions, working capital, and more.
This post will examine some of the best options and lenders for LLCs in 2023. Also, we’ll discuss requirements, how to get them, and all you need to get funds for your small business.
Can I Get a Business Loan With an LLC?
Of course, you can!
Remember that an LLC is a business structure that protects the owner’s personal assets from the company’s creditors and also provides some tax benefits.
So, you can borrow money just as any other business can.
The 5 Top LLC Loans Of 2023
A Camino Financial small business loan could be your best option.
We are a mission-driven company, and we’ll do everything we can to provide small business owners with the funds they need for their companies.
When you get a Camino Financial loan, you can be sure that you’re getting the best possible deal:
- The loan size ranges from $5,000 to $150,000
- You can choose repayment terms starting at 24, and up to 60 months
- We offer fixed annual interest rates from 18.75% to 24.75%
- You’re eligible to apply even if you don’t have an SSN or Social Security Number. An ITIN is all you need.
- An active and registered business for at least 9 months
You can apply for business loans for limited companies today! It takes just a few minutes, and applying will not affect your credit score.
Kabbage is a lending platform where customers can apply for lines of credit between $2K -250k.
Repayment terms range from 6-, 12- or -18 months, depending on what you choose, and you’ll also have flexible monthly fees if your account balance gets too high, but there are some attractive rates when paying off balances quickly.
- Time in business: 1 year
- A minimum credit score of 640
- Loan amounts of $2,000 to $250,000
- You’ll require a personal guarantee
- Have a valid business checking account.
- Monthly revenue of $3,000
- Be at least 18 years of age or older
Blue Vine’s platform provides small business owners access to financing solutions tailored to their needs. Their line of credit is from $6,000 and $250,000.
They have two options of payment structures: Flex 6, a weekly payment where you pay for 26 weeks, and Flex 12, a monthly payment over 12 months. Whichever suits you best! Your choice in payment structures may determine whether or not b eligible for a credit line increase.
- 6+ months in business
- A minimum credit score of 625+
- Credit lines up to $250,000
- Rates as low as 4.8%
- Business is operating in an eligible U.S. state
- Business in good standing
- Bank statements for the past 3 months.
Lendio is a business loan marketplace that allows you to connect to their lending partners.
That makes it an excellent option to compare business loans for LLC lenders, but also one to consider.
With wide choices of lenders, some may have different eligibility and terms, for instance, prepayment penalties, time of funding, amounts, credit score to apply, etc.
As a lending platform, you’ll be able to apply for merchant cash advances (MCAs), business loans for new LLCs, SBA loans, business acquisition loans, lines of credit, equipment financing, commercial mortgages, invoice factoring, and more.
- The minimum credit score depends on the lender and the type of loan (from 560 up to 680+)
- Time in business will be of at least six months to one year
- The application loan through the platform takes 15 minutes
As a direct lender, they offer loans to LLCs from $5,000 to $500,000 with high approval rates, which are a great choice when traditional lenders don’t fit you.
Their lending program works with automated daily or weekly payments with fixed terms.
- Minimal annual revenue of $250,000
- Collateral no needed
- At least 6 months in business
- A minimum credit score of 600
- Credit lines up to $250,000
- Business bank statements for the past 3 months
OnDeck offers loans specifically for small businesses and is one of the most popular options for new businesses: the short-term loans LLC and lines of credit.
You can use the line of credit to get loan amounts from $6,000 $100,000 with a monthly repayment term.
You can use the cash whenever you need it and make business expenses, such as payroll, inventory purchases, and cash flow management.
The term loan amount is $5K–$250K with a repayment term of 24 months. You can use the funds for business investments and ask for more funding when you’ve made the halfway paid down.
- Loan amounts from $5,000 to $250,000
- 1 year in business
- A minimum personal credit score of 600
- You will need a business checking account
- OnDeck is not available in Nevada, North Dakota, or South Dakota.
Tips for Comparing LLC Loans
When it comes to taking out an LLC loan, there are a few things you’ll want to keep in mind to get the best deal possible.
Here are a few tips to help you compare loans and make sure you’re getting the best one for your business:
Know what type of loan you need.
Many different types of loans are available, so it’s important to know which is right for your business.
Do you need a short-term loan to cover immediate expenses? A long-term loan for major investments? Or something in between?
Knowing what you need the loan for will help you narrow down your options and make it easier to compare loans.
Consider the interest rate
This is probably the most important factor to compare when taking out an LLC loan.
Ensure you understand how interest rates work and compare offers from different lenders to see who can give you the best deal.
Look at the repayment terms
Another important factor to consider when comparing loans is the repayment terms.
You’ll want to find a loan with terms that fit your budget and repayment schedule. Otherwise, you could default on the loan and damage your business’s credit score.
Compare fees and closing costs
In addition to interest rates, you’ll also want to compare any fees or closing costs associated with the loan.
These can add up, so it’s important to factor them into your decision.
Read the fine print
Once you’ve compared all of the above factors, it’s time to read the loan agreement carefully.
Make sure you understand all the terms and conditions before signing anything. This way, you can be confident you’re getting the best deal possible on your LLC loan.
What is an LLC Loan?
An LLC loan is a business loan typically used by limited liability companies (LLCs) to finance their business operations.
LLCs can often secure better loan terms and rates than other types of businesses because they offer lenders some protection from personal liability.
How do LLC loans work?
LLC loans allow a business to borrow money from a lending institution, which is then given to the LLC. The LLC then pays back the money over time with interest.
You can use them to finance new business ventures, expand an existing business, or purchase equipment or inventory.
Most Common LLC Loan Requirements
Here is a list of the essential qualifications that most lenders will look for:
- How long has your business been in operation? Most lenders will require you to have been in operation for at least 1 or 2 years.
- What are the monthly sales? Some lenders may require up to $10,000 in monthly gross sales.
- What’s your FICO score? Most lenders won’t approve your loan if you have a bad credit score or if you don’t have a previous credit history.
- Be prepared to find lenders that will ask you to pledge collateral
- Mont likely, you will need to have an SSN to receive a loan approval
- They will ask you to provide details about your company bank accounts and maybe even a copy of your LLC Operating Agreement.
Know that each lender will have different business loan requirements.
For example, an SBA loan or a business loan from a bank may be available only if you have a high credit score and excellent financials.
On the other hand, it’s easy to qualify for a business loan from an online lender.
Documents for LLC Business Loans
To qualify for a business loan for your LLC, you must provide copies of your business tax returns and bank statements for the last two years.
In addition, lenders will pull your credit report to review your financial history and verify your personal and business credit scores.
Lenders need copies of your current balance sheet and income statements to determine your debt-to-income ratio.
Likewise, a list of your aging accounts receivables and payables also gives the lender a picture of your business’s cash flow and financial health.
At Camino Financial, we’ll only review the last 6 months of your cash flow. Even better yet, the process is completely paperless because we use a tool called Plaid.
Lenders need copies of documents such as articles of incorporation and your business license.
Plus, a well-written business plan provides an overview of your business goals and objectives, detailing how you plan to run your business.
Also, an operating agreement shows how you manage specific departments such as customer service or marketing.
Lenders may ask the primary business owner to submit a resume listing management and business experience or for copies of commercial leases and rental agreements.
In addition, a certificate of good standing will also demonstrate that the business is legal and current on reports and fees with the Secretary of State.
How Much Does Your LLC Needs to Borrow
- By closely examining your past revenue and expenses, you can determine how much money to borrow.
- Review your profit and loss and cash flow statements for the past year. Then, project your future costs based on how your business trends financially.
- You can project increased revenue based on how you use the loan proceeds to expand business growth and increase sales.
Another way to determine how much money to borrow is to assess your debt-to-income ratio (DTI).
- Compare your income and expenses to determine how much money you can safely invest toward paying off debt.
- Make sure to add in associated costs to take out the business loan, such as closing costs and the total interest the lender charges.
- The uppermost importance is to apply for a loan amount you can repay while growing your business simultaneously.
How to Get a Loan With an LLC? 4 Steps to Get Funds
Here’s the step-by-step procedure you can follow to get an LLC loan:
Find the best type of loan for your LLC
First, figure out what you need the money for and how much you need.
If you require funds for buying machinery, a long-term business loan could be a good option.
But a line of credit may be better if you need the cash to make smaller purchases.
Select a lender
Make a list of lenders that you plan to approach. Then check if you can meet their requirements.
For example, is your credit score good enough? Or, are your monthly sales more than the threshold specified by the lender?
Once you zero in on the best financial product and lender, collect your documents and submit your loan application.
If you apply with an online lender, you can present your application anytime, anywhere, without having to collect any paper documents.
When you receive the loan, make sure that you use the money in your business. Don’t make the mistake of diverting the funds for personal expenses. / Commingling is when you mix personal and business finances, and it’s a dangerous practice.
Tips for Getting an LLC Business Loan
Here are some tips on how to get started:
- Know your credit score and history – Check your credit report before applying for a loan to fix any errors.
- Have a solid business plan – Lenders will want to see that you have a well-thought-out plan before they approve your loan. Include financial projections and explain how you’ll use the loan proceeds.
- Shop around. There are many different lenders, and each has its requirements and rates. Be sure to shop around to find the best deal for your business.
- Be prepared to collateralize the loan – This means that you’ll need to put up some of your personal assets, such as your home or car, as collateral
Types of Loans For LLC Business
Let’s dive right into it. Here are six types of LLC credit:
Small Business Loans
This is a pretty broad term, but when you talk about small business loans, the reference is usually to a form of business financing that has the following characteristics:
- You will receive the loan amount issued as a lump sum.
- You must repay the loan and interest in fixed installments if you borrow the money.
- Interest rates remain the same for the term of the loan.
Small business loans are available from banks, credit unions, financial institutions, and online lenders.
Some types of business loans are:
- Unsecured business loan
- Secured Loan
Before you finalize your loan, it’s advisable to check the terms and conditions carefully. And don’t forget to read the fine print. Some LLC small business loans involve hidden costs that you may learn about only after taking the loan.
Use this business loan calculator to see how much a loan could cost you:
A bank loan could be an excellent way to obtain LLC financing, as some banks offer LLC business loans at interest rates that other lenders find difficult to match.
However, these LLC bank loans have downsides.
A bank may not be the best place to obtain LLC business loans, especially if you’re in a hurry. Most banks have lengthy and cumbersome application processes. It may be weeks before you hear from them.
Some banks require you to submit paper documents and go to a branch.
There’s another problem that you could face with mainstream banks. The borrower may need to have an excellent credit score.
If you don’t meet this condition, applying could be a waste of time (or you could end up with very high LLC loan rates).
A bank may not be the best place to look for LLC business loans, especially if you need money quickly or you have a less than perfect credit score.
The U.S. Small Business Administration, or SBA, is a government agency with the primary function of supporting the country’s entrepreneurs.
One way it does this is by helping them access the needed capital.
SBA loans are the cheapest loans for LLCs by far.
The SBA 7(a) loans are the most popular SBA loans and the CDC/504 loan program.
A company can use SBA 7(a) loans for working capital needs and other business purposes.
You can use the money from a 7(a) loan to boost your cash flow, purchase equipment, or even refinance existing debt under certain conditions.
The CDC/504 loan program provides long-term fixed-rate funding for buying fixed assets.
The 7(a) loan and the CDC/504 loan program have an upper limit of $5 million. Interest rates vary, but the 7(a) is usually available at an annual rate of 5 to 11 percent, while the 504 loans cost significantly less.
On the downside, SBA loans are hard to qualify for. And it can sometimes take months to get your loan approved.
They may not be a good option when looking for loans to LLC.
This is a good way to raise money against your outstanding invoices.
Invoice factoring, also known as credit factoring, involves selling your accounts receivable to a lender.
An added advantage this method of borrowing provides is that the lender is responsible for collecting the invoices on your behalf. So, that’s one less headache for business owners.
This might be a perfect fit if you’re looking for a small business loan for a new LLC.
These companies advance funds based on the creditworthiness of the company that has bought the goods.
Consequently, the credit check that they carry out doesn’t focus on the borrower. For new LLCs, this can be a boon.
This is one of the more expensive LLC business loans, though. APRs can be 20 percent or higher.
But it’s a quick and easy way to raise money if you’re struggling with the issue of LLC credit.
Line of Credit
A business line of credit is ideal if you’re looking for a flexible form of LLC lending.
The borrower doesn’t receive funds in a lump sum. You can draw upon a line of credit when you need it with the LLC business loans in this category.
You save on costs as you pay interest only on the sum you borrow.
A line of credit is an excellent option if you don’t need money all at once. The fact that you can draw funds only when needed makes these types of LLC business loans a great alternative.
But remember, a line of credit can be expensive.
Annual interest costs could be north of 25 percent.
Merchant Cash Advance
A merchant cash advance is another type of commercial loan for an LLC. And while it is very popular, it might not be a good option. Let’s see why.
An MCA is something like invoice factoring. But instead of raising money against your invoices, you get an advance on your future credit card sales.
Businesses with significant volumes of credit card sales can find it easy to secure this form of financing.
Many business owners see them as great alternatives because they are easy to qualify. Lenders don’t usually look at your tax returns or credit score when you apply. Why are they not a good way of financing your LLC?
Merchant cash advances aren’t cheap, though. They’re downright expensive.
Interest rates can be in the region of 40 to 150 percent or even higher.
What is a Limited Liability Company (LLC)?
Business owners limit their personal liability by forming a legal entity called a Limited Liability Company or LLC.
You can take on business debt without being personally responsible should someone file a lawsuit against your company.
Creditors can’t come after your personal assets, such as your home, vehicles, and checking accounts.
Setting up an LLC costs less than forming a corporation but more when operating your business as a sole proprietorship or a partnership. Once you file the appropriate LLC organizational documents with your county/city and state, you can legally operate your business in very little time.
Pros and Cons of Forming an LLC
An LLC, or limited liability company, is a business structure that can provide personal asset protection and tax advantages.
Here are some of the top reasons to form an LLC:
One of the biggest advantages of an LLC is that it can help protect your personal assets and avoid this being seize if someone sues your business.
If you’re a sole proprietor or partner in a business, your assets are at risk if someone sues your business.
But as an LLC member, they are typically protected from creditors.
For example, if you’re a sole proprietor, the IRS will tax you on your business income at your personal income tax rate.
But with an LLC, you may be able to choose how they tax you.
They can tax you either as an LLC (which means you’ll pay taxes on your business income at the corporate tax rate), or you can choose whether they tax you as a sole proprietor (which means you’ll pay taxes on your business income at your personal income tax rate).
Easy to form and operate
In most states, you must file a simple form with the secretary of state’s office and pay a filing fee.
And, unlike corporations, LLCs don’t have to hold annual meetings or keep minutes of meetings.
Flexible management structure
Unlike corporations, which must have a board of directors and officers, you can manage LLCs in various ways.
For example, the members (owners), one or more managers, or a combination can manage an LLC.
As an LLC member, you’re typically not personally liable for the debts and liabilities of the LLC.
This means if someone sues your LLC, creditors can usually only go after the assets of the LLC, not your personal assets.
LLCs can also be attractive to investors because they offer the benefits of both corporations and partnerships.
For example, like corporations, LLCs can issue multiple stock classes, making them attractive to venture capitalists and other investors.
But, like partnerships, LLCs can also have unlimited liability for their members, which makes them attractive to lenders.
Why do LLCs Need Business Financing?
There are many reasons why you, as the owner of an LLC, might apply for a loan:
- You might use loan proceeds to market a line of new products and services or consolidate debt to reduce the total interest paid.
- An opportunity may come up to purchase real estate or rent warehouse space.
- You can always get business financing to improve your cash flow or increase your inventory.
- Extra cash means upgrading equipment, investing in employee benefits, or purchasing new furniture.
You can use business loan funds to pay operational expenses such as accounts payable, supplies, renovation, or building construction.
Get a Loan For LLC from the Best Lender
As you’ve seen, there are plenty of options when you’re looking for an LLC small business loan.
The important thing is to identify a lender that understands your requirements and has the expertise to provide you with a loan that’s best suited to your needs.
At Camino Financial, our motto is No Business Left Behind, and our loan specialists will do all they can to find the best financing solution for your company.
Learn more about business
Interest Rate Hike: The New Average Business Loan Rates
How to Find Angel Investors: Learn From the Experts
Investing in a Recession: Taking Advantage of an Economic Downturn
How to Get Financing for a Business: Best Ways in 2023
How to set up an LLC?
At some point, many business owners opt to convert their sole proprietorship into an LLC.
Setting up an LLC involves following the rules laid down by your state’s Secretary of State. You can even do it from home by using LegalZoom, an online platform that provides this service to business owners.
Can an LLC borrow money from a bank?
Yes, an LLC can get loans from a bank if it meets the requirements.
Does an LLC have a credit score?
Yes. Your business credit score is your LLC’s credit score.
But you should be aware that lenders may also ask to see your personal credit score before approving a loan to your company.
Can an LLC get an SBA loan?
Yes, an LLC can get an SBA loan. However, there are a few things to keep in mind. The LLC must show that it is a small business according to SBA guidelines, have a good credit history, have good financial standing, and have a sound business plan.
Is it easier to get a loan with an LLC?
Forming an LLC can give you an advantage when applying for a loan.
LLCs are often less risky than sole proprietorships since they offer limited liability protection to their owners. If your LLC defaults on a loan, creditors can only go after the business’s assets and not your personal assets.
Is it hard to get a business loan with an LLC?
Every lender has different criteria for approving loan applications, so it’s difficult to say definitively whether or not it will be hard to get a business loan with an LLC.
However, there are many options, including traditional bank loans, and alternative lenders, that you can review and see what is best for you.
How to apply for an LLC?
To form an LLC, you will need to file articles of organization with your state’s secretary of state.
The articles of organization will include basic information about your LLC, such as its name, purpose, and membership. You will also need to create an operating agreement, which is a document that outlines how your LLC will operate.
How to fund an LLC?
You can fund an LLC with many options, including cash, personal, or other business assets. You can also take out a business or personal loan to finance the LLC.
Are there business loans for startup LLCs?
Yes! Camino Financial has a great product, the Startup Business Loan, that is perfect for startups and even people who are just planning on opening a business.
*Terms and requirements subject to change without notice.