Lender giving dollar bills to borrower over desk office
Betsy Wise
By: betsy_wise
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Commercial Loans for Businesses Earning Under $1 Million in Sales

Without a doubt, commercial loans can help you promote your products and services as you grow your business. You may already use a business credit card, short-term lines of credit or other types of working capital in place of commercial loans to keep your business humming along.

It’s common for small businesses, especially start-up companies, to earn less than $1 million in sales since revenue may not exceed expenses for years. To help business owners face daunting financial challenges, Camino Financial has a working knowledge of the perils small businesses face.

We excel at helping borrowers succeed at completing their business goals. The company works with numerous business owners to underwrite commercial loans giving personal attention to every detail. We endeavor to help your business grow by leaps and bounds.

Why Is It More Difficult for Businesses Earning Less than One Million in Annual Sales to Secure Funding?

You may have all your financial ducks in a row to include a well-written business plan, audited financial statements, and copies of personal and business tax returns. Even so, lending institutions may hesitate to approve a small business loan for the following reasons.

  • Economic Instability: Through no fault of yours, the economy can take a downturn which affects everyone. Banks keep an eye on economic forecasts and consider new businesses at a greater risk for potential failure.
  • Cash Flow: When first starting a business, owners spread out available funds between advertising, unexpected expenses, and monthly expenditures. When money is tight, it’s easy to overspend without meaning to. Impulse buying, not adhering to a budget, and dwindling inventories sabotage your cash flow in a hurry. Lenders review spending patterns for businesses when funding a loan.
  • Clientele:  Your customer base is the lifeblood that keeps your business thriving. Lenders prefer that businesses have a substantial client list equating to increased revenue.
  • Credit Score:  Lenders use three credit institutions; namely, Experian, Transunion, and Equifax to establish a credit score. These bureaus look at your payment history, what you owe, your credit history, and other factors to formulate a ranking. If your business is new, lenders have a harder time making an informed decision.

5 Types of Commercial Loans Available to Businesses with Revenue Less Than One Million

    1. Microloans: To cover startup costs, lenders offer microloans for amounts up to $50,000. In many instances, lenders help borrowers with management and goal setting. Loans are typically paid back within 6 years and funds may be restricted to specific usages. With this loan, you can cover operating expenses, provide working capital, and have funds to launch a new product. Microlenders don’t usually have stringent loan requirements as compared to banks, making microloans a favorable option for small business owners. Additionally, you can use a microloan to build up your credit score. Camino Financial offers microloans that range from $5,000 to $75,000, with great terms and conditions. But we’ll get there!
    2. Invoice Financing: Also referred to as factoring, these loans take the pressure off when you have slow-paying customers. Lenders purchase unpaid invoices at a nominal fee to free up your cash flow until the accounts receivable are paid. In addition to improving cash flow, you’re in a position to extend 30 – 60 day payment plans to your customers since invoices are already funded.
    3. Equipment Loans: Instead of leasing business equipment, you can pay down 10 to 20 percent or less to purchase the equipment and make payments over a designated period. Lenders may require the equipment as collateral before they approve the loan. You won’t need to use your existing working capital meaning you can concentrate on expanding your business, making improvements, or marketing products.
    4.  Merchant Cash Advances: Characterized by short payment terms typically less than 24 months, lenders extend lump sum payments traded for a percentage of future sales. The borrower agrees to repay the loan along with a fee. If you have a slower month, you’ll pay back less and vice versa. If your credit rating is somewhere in the 500 range, approval rates are high since credit requirements aren’t nearly as strict as with other loan options.
    5. Real Estate Loans: With this type of funding, borrowers can purchase a building, secure commercial property in a location that optimizes growth, and construct or renovate a structure. A small business owner could also refinance debt. Capital acquired via a real estate loan cannot be used as working capital or to increase inventory. Owning real estate beefs up your financial portfolio and typically increases in value over time. Lenders readily see that you’re an entrepreneur interested in building wealth.

Camino Financial Can Help Your Business Succeed

The next step is to complete a simple loan application that provides a snapshot of your business operation. You’ll work with a personal business loan specialist to review your credit profile. In addition to downloading a minimum of six months of bank statements, we may request other documentation.

But remember: it isn’t necessary for your business revenue to reach $1 million in sales. Camino Financial focuses on your financial health by confirming that your bank statements and other documents are in order. Our secure website means when you submit your data to us it’s transferred within minutes without any fear of compromise.

Our commercial loans are structured with loan amounts ranging from $5,000 to $75,000 (microloans) and from $10,000 to $400,000 (small business loans). Our annual interest rates average from 12% to 40%. To streamline the process, Camino Financial doesn’t require collateral to secure a loan. That takes all the worry out of the loan process so you can concentrate on building your business.  

Need lo learn more? Check here how to get a Camino Financial business loan in 4 steps.

In Conclusion

According to the National Small Business Association year-end report in 2016, roughly 69% of small businesses are able to secure adequate funding. Equally noteworthy, is that the NSBA reported 85% of small business owners feel confident about their futures and 78% anticipated continued growth.

Nowadays, securing a loan is as simple as sitting at your computer and working with an established lender like Camino Financial. Why not apply online today? You can complete the easy, fast application at home or work, using any mobile app.  It won’t affect your credit. And with our commercial loans typically approved and funded within 4-10 days, your business won’t miss a beat.

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