If you have a limited liability company, you might be wondering: Can I get a business loan with an LLC?
The answer is a resounding yes! We walk you through loan requirements, small business loan options, and credit considerations to support your LLC funding journey.
LLC Loan Requirements
An LLC can absolutely get a small business loan. However, whether or not you’re eligible for an LLC loan is an entirely different thing.
Eligibility requirements will vary depending on where you turn to for financing. However, almost every lender will look into:
- Time in Business: Businesses that have been operating for longer are inherently less risky for lenders. A lender will often require you to have been in business for at least six months.
- Business Revenue: Your business revenue indicates your ability to pay back your LLC business loan. A lender will look for strong business revenue. The higher your revenue, the easier it will be to secure a small business loan.
- Size Standards (for SBA Loan): This only applies to loans from the Small Business Administration (SBA). An SBA loan requires you to meet specific size requirements. You can learn more about size standards that an SBA lender will be looking for here.
One major focus for any lender is your credit score. A new LLC won’t be able to leverage its business credit score. Instead, you’ll have to rely on your personal credit score. If you have great personal credit, you can likely get an LLC loan with minimal issues.
The longer you’re in business, the more financing options you can access. More funding options become accessible with good business credit and at least two years in business. If you want a business line of credit or term loan, this will be your focus.
Get More Financing with Your LLC by Setting a Fundable Foundation
A fundable foundation is one that is equipped with all of the crucial elements of a business that a lender is willing to extend financing to.
You can create a fundable foundation with simple activities like:
- Getting an EIN. You need an EIN for business credit purposes. You’ll also need an EIN to hire employees and file certain types of taxes. You can get one for free from the IRS.
- Getting a DUNS Number. They may ask for your DUNS Number on your loan application. You can get a DUNS Number for free and have it in around 30 days. You can also expedite the process for $229.
- Establishing separate business contact information. This includes a business phone number, business address, and fax number.
- Setting up a business bank account.
- Acquiring the necessary licenses and permits needed to operate your business legally. This includes those at the federal and state levels. A lack of permits will raise red flags for a lender.
- Creating a website that is optimized for search engines, modern, professional, and fast.
Business Loan Options for LLCs
Are you a new LLC? As mentioned above, you will have to rely on personal credit if you want an LLC loan fast at first. However, you can also focus on building your business credit to access more and better financing options later.
This can be achieved by working your way up the business credit ladder. The business credit ladder looks like the following.
Trade Credit & Tier 1 Business Credit Vendors
Trade credit and tier 1 business credit vendors are where every small business owner starts.
These credit vendors are easy to qualify for. They accept nearly every business, making them the perfect solution when you need to start building business credit.
More than that, most of them report to at least one business credit bureau. Some may report to multiple bureaus, helping you build business credit faster.
Some examples of tier 1 business credit vendors include Creative Analytics, Grainger Industrial Supply, and Uline. These are examples of business credit vendors that will extend net 30 terms.
Are you looking to build business credit and fund your business? Some examples of tier 1 vendors include Brex and FairFigure. There are even unique credit vendors like eCredable. They can help you build business credit by reporting third-party bills.
The one thing to always be mindful of is that credit reporting is always subject to change. Ask where and if a tier 1 vendor reports before signing up for an account.
You’ll need to get at least 10 payments on your business credit reports to get to the next level.
Business Gas Cards & Tier 2
Each tier becomes a little bit harder to get into if you haven’t worked on establishing accounts in the previous one. Tier 2 business credit vendors want you to have some business credit history. Business owners can circumvent this with a personal guarantee. However, it’s best not to.
Tier 2 business credit vendors will grant you greater purchasing power. This makes it easier to acquire the goods and services your business needs to function. It also allows you to tap into higher credit limits.
Examples of tier 2 business credit vendors include Maverick Office Supplies, Office Garner, and NAMYNOT.
As with the previous tier, you can find some cards that you will be able to qualify for. Home Depot offers tier 1 and tier 2 cards.
Another great choice is business gas cards. Business cards are easy to qualify for and are designed to meet the needs of businesses with fleets. They offer a host of rewards and gas rebates. These rewards often extend to fleet-related expenses.
Some business gas cards that come to mind include the Coast Fuel Card and the AtoB Fuel Cards.
Business Auto Loans & Tier 3
Tier 3 business credit vendors will be much more difficult to qualify for. In order to get a tier 3 business credit vendor account, business owners need:
- A business that’s been operating longer (how long will vary depending on the lender)
- An established business credit score
- Regular business revenue
- At least 6 trade accounts reporting
Some tier 3 business credit vendors you should consider opening an account with include Crown Office Supplies, Gempler’s, and Platt Electric Supply.
Are you in the market for a new business vehicle or even a fleet of vehicles? Business auto loans fall in this category as well.
Business auto loans are often defined by a loan term of up to 84 months, up to $500,000 in funding, and solutions designed for anything from regular work vehicles to commercial trucks.
Take care to research your options so that you’re getting the best terms for your business.
Tier 4 – Top Options
You have to reach tier 4 when you want the best financing options. Here’s where you’ll be able to find LLC loan options that will help you tap into lower interest rates, a higher small business loan amount, and better repayment terms.
What can you find in tier 4? Some examples of an LLC business loan in tier 4 include:
- Business Line of Credit: A business line of credit isn’t a traditional business loan. Rather, it’s a revolving line of credit that you can continue to borrow from instead of a lump sum, bolstering cash flow and offering continued support for expenses.
- Term Loan: A conventional term loan can give you the lump sum cash you need for your business. A term loan offers low interest rates and the flexibility you need to use your financing on a wide range of business needs.
- SBA Loans: An SBA loan can be a desirable LLC loan option from a traditional lender. This small business loan offers competitive interest rates, longer repayment periods, lower down payments, and a myriad of business applications.
With the right strategy, you can tap into tier 4 financing solutions quickly by climbing up the previous business credit tiers. Once there, you have a wealth of options. This can include a bank loan, credit union business term loans, or even funding from an online lender.
Fast LLC Loan Options for Owners with Good Personal Credit
Good personal credit can help you tap into LLC loan options immediately. Do you have a good personal credit score with all the major credit bureaus? Consider these LLC business loan options that hinge on personal credit approval.
Business Credit Cards
A good personal credit score is needed for almost every business credit card. The only exception is EIN-only business credit cards.
A good business credit card is one with a low variable APR, a good rewards structure, and one that reports to several business credit bureaus.
However, many traditional options come with one critical downside: they also report to personal credit. This can affect your personal credit score and personal credit history. It’s important to know this before signing up for just any business credit card.
If you’re having trouble getting business credit cards, another solution is Credit Suite’s Credit Card Stacking Program.
The Credit Card Stacking Program can help you access up to $150,000 in unsecured, no-doc credit cards.
If you or a Credit Partner has a good personal credit score with each bureau, you can get:
- 0% interest on your credit cards for 6 to 18 months
- Funding with no upfront application fees
- Credit card stacking that doesn’t require collateral or have cash flow requirements
- Application for funding in three weeks, at most
A traditional LLC loan isn’t your only option. Consider a business credit card stacking program for fast funding without the business loan hurdles!
Invoice Financing
A traditional small business loan often requires collateral. But there are many forms of business funding out there that feature inherent collateral. The first financing option like this is invoice financing.
Invoice financing is a simple concept. You select eligible invoices to act as collateral, a lender gives you an advance on these outstanding invoices, and you pay the amount you borrowed back (plus a fee, of course).
Invoice financing can be attractive because it’s easy to qualify for. So long as your clients have good credit and have a good payment history, you can get cash for your outstanding invoices.
As with any form of LLC financing, there are downsides. One disadvantage is that invoice financing can be expensive. Some lenders will charge higher fees. This can make it expensive to leverage your invoices.
The primary concern for small business owners is late or non-payment. If your clients don’t pay their invoices on time, you could end up having to pay late fees. This increases the total amount you owe.
It can be even more problematic if your client never pays their invoice, putting you on the hook for the full amount.
Equipment Financing
Some businesses require specialized, expensive equipment to operate.
One way to help manage these specific costs for your LLC is with equipment financing.
Equipment loans are often easy to qualify for. As with the above, they don’t require collateral. The equipment that you’re financing is the collateral.
Equipment financing often works like any other LLC loan. You may see loan lengths of up to ten years. A down payment may be required from your lender for these small business loans. You can expect fixed interest rates and monthly payments on your equipment loan.
Consider the type of equipment financing support you need. This can affect the financing you receive. For example, an equipment financing loan geared toward a restaurant may offer less than an LLC loan designed to help purchase specialized construction equipment.
Get More Financing with Credit Suite
Credit Suite offers business financing solutions and credit building solutions that your LLC needs to thrive.
Get started with Credit Suite today to access better financing solutions rapidly!
