Starting a business requires passion and financial support. But so does growing a business. No matter where you are in your business’s life cycle, a business loan can help you get started or address specific needs along the way. Many businesses already sought out funding to aid their operations, but COVID-19 has pushed many more businesses into seeking out additional financial assistance. When you are considering your business’s financing options, it’s important to understand the different types of loans available to small businesses in Ventura County and Santa Barbara so you can select the right option for your needs.
Loans for Your Small Business
Some new entrepreneurs start their businesses without any commercial loans or debt financing. So that they do not saddle themselves with debt, these business owners often choose to obtain their initial financing from their own savings, friends and family members, informal investors, or home-equity loans. For those who do not have these financing options available, many seek financing from commercial lenders.
For most businesses, there are two common and widely-used types of debt financing: A conventional loan or an SBA (Small Business Administration) loan. Both offer advantages based on your own business circumstances.
Firstly, consider your bank. If you’ve had a prior, positive financial relationship with a certain bank, then they may a good option from which to seek a loan. Generally, borrowers should look to a financial institution that specializes in lending to small- and medium-sized businesses. Not all banks offer SBA loans, and some cater to larger businesses with higher annual revenues.
Both a conventional commercial and an SBA loan are good options for small businesses. They can offer reasonable rates and flexible repayment terms.
A conventional loan is what you might think when you think of a loan – the bank lends the borrower a set amount of money at a fixed interest rate and repayment term. The bank is often underwriting specific requirements (such as cash flow, collateral, operating history, etc.). The bank takes on all of the risks of lending money to the borrower and the parameters are set based on bank policies and guidelines.
Secondly, consider an SBA loan, which is a bank loan guaranteed by the U.S. Small Business Administration. This loan guarantees a percentage of the loan to the bank in the event of default by the borrower. The guarantee by the federal government mitigates loans that could be perceived as high risk due to having less money down. In order to qualify for the SBA guaranteed loan, the business must:
- Be organized for-profit and qualify as a small business
- Be of good character and demonstrate sufficient management expertise and commitment to providing assurance of a successful business operation
- Have satisfactory historical earnings and cash-flow records, or probably future earnings that demonstrate the ability to repay the loan
- Have reasonable capital injection for a new business start-up or business acquisition
Why Choose Us?
At Economic Development Collaborative, we provide access to capital for new and growing businesses, advising almost a thousand companies a year. Each loan application is paired with one of our top-tier financial advisors to ensure that you have the best success in reaching the capital they need. We offer a range of business loans including:
- EDC Business Development Loan Fund
- Childcare Investment Loan Fund
- City of Camarillo Business Assistance Loan Fund
- City of Ventura Business Assistance Loan Fund
- Disaster Bridge Loan Fund
With the use of our funds, the businesses we work with have created 1,200 local jobs that get people back at work and living life to the fullest. We also have a commitment and a passion to reach underserved communities, with 67 percent of loans awarded to minority and women-owned businesses. We can help you find the right loan for your next business venture.
For more guidance on growing your own business, contact the Economic Development Collaborative. Conveniently located in Camarillo, California, we’re here to help and have a webpage devoted to resources and information on how your business can handle the COVID-19 pandemic.