There are LCC loans for Limited Liability Company, but is their financing as readily available as for other types of small businesses?
In this post, we’ll give you the top options and provide you with some more information that you may find helpful.¡Obtén un préstamo para tu LLC!
6 types of LLC business loans
Let’s dive right into it. Here are six types of LLC credit:
1. 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 as a lump sum.
- The borrower must repay the loan along with interest in fixed installments.
- Interest rates remain the same for the term of the loan.
Small business loans are available from banks, credit unions, other types of financial institutions, and online lenders.
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 loans involve hidden costs that you may learn about only after you have taken the loan.
Use this business loan calculator to see how much a loan could cost you:
Fortunately, there are great alternatives with minimal LLC loan requirements and amicable terms. A Camino Financial small business loan could be your best option.
Camino Financial LLC loan rates
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 $400,000
- you can choose repayment terms starting at 24 and up to 60 months
- we offer fixed annual interest rates from 12% to 40%
A Camino Financial small business loan could be superior to a bank loan in many ways. For example, you’re eligible to apply even if you don’t have an SSN or Social Security Number. An ITIN is all you need.
Camino Financial is a California finance lender, loans are available for you, and you can apply for a business loan today! It takes just a few minutes, and applying will not affect your credit score.¡Califica hoy mismo!
2. Bank Loan
A bank loan could be an excellent way to obtain LLC financing as some banks offer LLC loans at rates of interest that other lenders find difficult to match.
However, these LLC 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.
Additionally, some banks still 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, it could be a waste of time to apply (or you could end up with very high LLC loan rates).
A bank may not be the best place to look for LLC loans, especially if you need money quickly or you have a less than perfect credit score.
3. SBA Loan
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 capital they need.
SBA loans are the cheapest LLC loans by far.
The most popular SBA loans are the SBA 7(a) loans and the CDC/504 loan program.
You can use the SBA 7(a) loans for a company’s working capital needs and a range of 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 than that.
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 you are looking for LLC business loans.
4. Invoice Factoring
This is a good way to raise money against your unpaid 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.
If you’re looking for a small business loan for a new LLC, invoice factoring might be a perfect fit.
Invoice factoring 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.
Invoice factoring is one of the more expensive LLC 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.
5. Line of Credit
A business line of credit is an ideal solution if you’re looking for a flexible form of LLC lending.
The borrower doesn’t receive funds in a lump sum. With LLC loans, you can draw a line of credit when needed.
You save on costs as you pay interest only on the sum you borrow.
If you don’t need money all at once, a line of credit is an excellent option. The fact that you can draw funds only when you need them 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.
6. 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.
A merchant cash advance 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 for. Lenders don’t usually look at your tax returns or credit score when you apply. If so, why are they not a good way of financing your LLC?
Merchant cash advances aren’t cheap, though. In fact, they’re downright expensive.
Interest rates can be in the region of 40 to 150 percent or even higher.
Most common qualifications for LLC Loans
The six LLC loans we’ve listed in this post have different requirements.
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.
Here is a list of the basic 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
Of course, each lender will have other requirements, as well. They will provide details about your company bank accounts and maybe even a copy of your LLC Operating Agreement.
Our LLC loan requirements
Camino Financial has minimal requirements, which make it easier to apply for a small business
- Only nine months in business
- $2,500 in monthly gross sales
- You can apply even if you don’t have a credit history
- We don’t require collateral
- You can apply with an ITIN
How do I fund my LLC? 4 steps to get an LLC loan
Here’s the step-by-step procedure you can follow to get an LLC loan:
1. Find the best type of loan for your LLC
First, figure out what you need the money for. If you require funds for buying machinery, a long-term business loan could be a good option. But if you need the cash to make smaller purchases, a line of credit may be a better idea.
2. 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 that 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 will be able to 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 the act of mixing your personal and business finances, and it’s a dangerous practice..
Get loans for LLC from the best lender
As you’ve seen, there are plenty of options when you’re looking for LLC loans.
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 arrive at the best financing solution for your company.
We invite you to apply for a business loan and become part of the Camino Financial family.¡Aplica ya!
FAQs About LLC Loans
What is an LLC?
An LLC, or Limited Liability Company, is a legal business structure.
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 as long as it meets the requirements that the bank specifies.
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 I get a business loan as 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.
At Camino Financial, we’ll be happy to help you fund all your business needs.
Are there LLC startup loans?
Yes! Actually, Camino Financial has a great product, the Solopreneur Loan, that is perfect for startups and even for people that are just planning on opening a business.