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Starting and maintaining a business can be difficult, financially, but small business loans can help business owners get on their feet and stay there. Still, you should never enter into a financial agreement without understanding what you are getting into. Consulting a lawyer before taking out a loan is always a good idea, and your attorney can help you negotiate and protect your best interests.
At Poydasheff & Sowers, LLC, our Columbus business loan lawyers are ready to take a look at your documents and give you the legal advice you need. Don’t get taken advantage of by a predatory lender or agree to a bad interest rate.
Instead, call us at (706) 705-5777 to discuss your goals and financing options.
Types of Small Business Loans
For small businesses, the most common type of loan is a 7(a) loan from the U.S. Small Business Administration (SBA). The 7(a) loan provides short- and long-term working capital, helps businesses refinance their existing debt, and allows for the purchase of furniture, fixtures, and supplies. Businesses can also use 7(a) loans to purchase real estate, construct a new building, or acquire another business.
Many business owners prefer government loans, but other lenders offer different benefits and drawbacks.
The 5 main types of bank loans for small businesses include:
- Line-of-credit loans — like a credit card for your business.
- Installment loans — similar to a car loan.
- Balloon loans — like an installment loan, but businesses pay off the interest first (the term “balloon loan” does not usually appear in contracts).
- Interim loans — short-term loans; usually for businesses waiting on mortgages during construction.
- Secured and unsecured loans — standard loans with or without a form of collateral (successful businesses that have good relationships with lenders may be able to get unsecured loans, but others will have to take out a loan against their assets).
Even with SBA-guaranteed loans, the terms of your loan will depend on your credit and other factors. Still, you should only take loans that will serve your best interests.
Before signing your next loan, talk to our Columbus business loan attorneys!
Watch Out for Predatory Lenders
Predatory lenders often hunt for applicants who have been denied by other lenders or have trouble with their credit. Do not enter into any loan under deception or coercion and beware of interest rates that are higher than other competitors or fees that are more than 5% of the loan value.
You need to know the full payment schedule and the annual percentage rate before you take a loan, and you should never lie on paperwork or leave signature boxes blank.
If you feel like your lender is pressuring you into a loan, get a few competing offers and talk to an attorney about what you are experiencing.
A seasoned lawyer will help you identify and avoid predatory lending practices — and they can even help you explore other options!
What Happens if I Default on My Loan?
Financial challenges arise for even the strongest of businesses. If you default on a business loan, you do not have to rush to lay off staff or file for bankruptcy, but you do have to make a plan. Our legal team can help you negotiate with your lenders to create a solution that is beneficial for everyone.
Remember, nothing is guaranteed, you are not alone, and you certainly have options.
Whether you’re signing up for a new loan or need help refinancing an old one, Poydasheff & Sowers, LLC can help you explore your options.
We are committed to our clients and dedicated to great results.
All you need to do is call us at (706) 705-5777 or contact us online to schedule a consultation.
Explore Other Financing Options
While a small business loan works wonders for some business owners, others thrive with grants and investors. Sometimes, our clients come into our office with questions about a business loan and come out of our office with a grant application or a plan for securing capital. Poydasheff & Sowers, LLC is here to help business owners in whatever way we can. Our team wants to be by your business’ side, every step of the way.
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