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Top Options for $20k Loans If Your Company Has Been In Business for 3 Years or More

November 14, 2023
20k loans Credit Suite

When we talk about building business credit and fundability, we do so with an end in mind. If you start working the process from the beginning, by the time you have been in business for 3 years or more you will have access to all the business funding you’ll need. That includes $20k loans or even higher.

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Options for $20k Loans

If you follow the steps in order and handle credit responsibly, by the time you have reached this point you will be eligible for the best rates and terms available.

What are these options available to companies that have been in business for 3 years or more?

Term Loans

20k loans Credit SuiteBanks are often the first place we think of when we consider financing. Yet, big banks only sign off on about 25% of the small business loan applications that come their way. Term loans often have lower interest rates than many other funding options. They also tend to be for higher loan amounts.

Generally speaking, the companies banks end up funding have:

  • Very strong financials and
  • Near-perfect credit scores
  • Owners with good personal credit
  • Collateral

You are more likely to meet these qualifications if you have at least 3 years in business and have been working on fundability and building business credit during that time.

Bridge Loans

A bridge loan is a short-term loan that a business or individual can use until they secure more permanent financing or remove an existing obligation. It allows the user to meet current obligations by providing immediate cash flow. Bridge loans are short term, up to one year. They have relatively high interest rates. Collateral such as equipment or inventory is common as well.

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SBA Loans

Three years or more time in business will help make SBA loans a real possibility. It’ll be easier to get an SBA loan the longer you’re in business. This is because you can more easily show your business is established and making money consistently.

If you can show profitability and responsible credit and bank account management, your chances of getting an approval for an SBA loan will improve drastically.

SBA loans have great terms, so it’s worth it to work toward building eligibility.

SBA 504

The SBA 504 loan program is an economic development loan program that offers small businesses an avenue for business financing, while promoting business growth, and job creation.

This program provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. Use it to buy currently existing buildings, construct new buildings, and more.

For corporations, anyone with a 20% ownership stake (or more) must fill out the application. This includes swearing they are not under indictment for any criminal offense. In general, the SBA provides 40% of the total project costs,  a participating lender covers up to 50% of the total project costs and the borrower contributes 10% of the project costs.

Under certain circumstances, a borrower may have to contribute up to 20% of the total project costs.

SBA 7(a)

This is the SBA’s most popular loan. The SBA guarantees 85% for loans up to $150,000 and 75% for loans greater than $150,000. The SBA makes the lending decision, but qualified lenders may be given authority to make credit decisions without SBA review.

Businesses must provide Articles of Organization, business licenses, documentation of lawsuits, judgments, bankruptcy, or other pertinent documentation. Also, lenders do not have to take collateral for loans up to $25,000.

For loans in excess of $350,000, the SBA requires that the lender collateralize the loan to the maximum extent possible up to the loan amount.

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Online Lending

Online lending works well for those with less time in business, or in situations where traditional lenders will not work. Still, they will offer better terms and rates to those companies in business longer and with strong fundability. That means, it is best to not discount them even after you reach this point.

Some of our favorite online lenders are listed here.

After 3 Years in Business, $20k Loans May Not Be An Issue

If you are here looking for options for $20k loans for your business, and you have been in business for 3 years or more, you are probably going to be okay.  This is especially true if you have been working to build strong fundability and business credit as part of that.

If you are struggling to find $20k loans, start now building fundability, including strong business credit, and you’ll get there in no time.

About the author 

Faith Stewart

Faith has a BBA with a major in Accounting, and a combined 20 years of experience in the fields of finance and account.

Before switching to writing, she spent 10 years working in various areas of small business and personal finance and accounting, including working as a public auditor at BKD, LLP, Financial Director at Central Arkansas Development Council, and Commercial Credit Analyst at Farmer's Bank and Trust.

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