How to Get a $200K Business Loan (6 Steps)

If you’re looking for financing to start or grow your business, there are plenty of options worth exploring, and each has its own pros and cons. In this guide, I’ll detail some of the most common financing options available and help you decide which is best for your business.

Ready to get a $200k business loan quickly? Llama Loan offers a suite of business financing options that are fast, affordable, and flexible. Get in touch with us today to explore all of your options!

Types of Business Financing

SBA Loans

If you're looking for a business loan, the Small Business Administration (SBA) can be a great resource. These loans are designed to help small businesses access financing that they might not otherwise be able to secure from traditional banks.?

To be eligible for an SBA loan, your business must meet certain criteria. For example, you must be a for-profit business, and you must be located in the United States. Your business must also meet the SBA's size standards, which can vary by industry.

SBA loans generally require collateral and a personal guarantee from the business owners. Collateral can include real estate, equipment, or other assets to back your financing. A personal guarantee means that the business owners are personally responsible for repaying the loan if the business is unable to do so.

One of the main benefits of an SBA loan is that it typically has a lower interest rate than traditional business loans. They are set by the SBA, and they vary depending on the type of loan and the length of the repayment term.?

Ready to get a 200k SBA loan? Learn more about our options here!

Business Term Loans

If you need to borrow a large sum of money for your business, a business term loan could be a great option. These loans provide a fixed amount of capital upfront, which you pay back over a set period with interest.

When applying for a business term loan, your credit score plays a significant role in loan approval. A score of 550 or above is often required, but some lenders may be more lenient than others. Additionally, lenders will consider your business's financial history, revenue, and profitability when deciding whether to approve your loan application.

The loan amount you can receive will depend on your business's financial needs and creditworthiness. For example, if you need a $200,000 business loan, you’ll need to demonstrate a steady stream of revenue and a solid business history.

Repayment terms for business term loans typically range from one to over ten years, although some lenders may offer longer or shorter repayment terms depending on several factors.

Merchant Cash Advance

If you need financing quickly and have stable revenue, a merchant cash advance (MCA) can be a fast and simple option for your business. This type of financing is based on your business's cash flow, rather than your credit history or business history which gives lenders greater flexibility in the approval process, making it a perfect choice if your business has less-than-perfect credit.

One benefit of an MCA is that the funding speed can be very fast, often within a few days of application. This can be helpful if you need funds quickly to cover unexpected business expenses or to take advantage of a time-sensitive opportunity.

Another benefit of a merchant cash advance is the flexible payment amounts. Instead of fixed repayments, your payment amount is determined by your business’s revenue. This means that your payments will align with your business’s revenue, which can make them easier to manage.

However, it's important to keep in mind that an MCA is one of the more expensive forms of business financing, so be sure to analyze the total cost of your financing before committing.

Equipment Financing

If your business requires equipment or machinery to operate, equipment financing can be an excellent option to secure financing quickly.?

Some lenders are willing to finance up to 90% of the purchase, allowing you to acquire the necessary equipment without having to make large down payments.

Another benefit of equipment financing is the speed of funding. In most cases, you can secure your financing in under a week – allowing you to obtain the equipment you need faster than other methods.

Interest rates on equipment financing will ultimately depend on your business’s credit rating, but in most cases, they are similar to other traditional forms of business financing making it attractive for businesses with strong credit.

Invoice Factoring

If you have unpaid invoices and need cash flow for your business, invoice factoring might be worth considering. This is a form of asset-based financing where you receive an advance of capital for your unpaid invoices, which can help you manage your business’s cash flow.?

When you factor your invoices, you’ll sell them to a factoring company at a discount and the factoring company then takes over the responsibility of collecting payment from your customers, allowing you to get paid faster so you can grow your business.

One of the benefits of invoice factoring is that it's easier to qualify for than traditional loans. Factoring companies are more interested in the creditworthiness of your customers than your own creditworthiness. This means that if you have a lot of outstanding invoices from creditworthy customers, you're more likely to be approved for invoice factoring.

The fees for invoice factoring can vary depending on the factoring company and the credibility of your customers. Additionally, you won’t need any additional collateral for your financing, making it available to businesses that don’t have additional assets to supply.?

Business Line of Credit

If you need a flexible source of financing for your business, a business line of credit can be a great business loan alternative to secure the financing you need.?

With a business line of credit, you can borrow up to a predetermined credit limit and only pay interest on the amount you borrow, allowing you to lower the cost of your financing.

Another benefit of a line of credit is the speed of accessing funds. The application process is much faster than other types of financing and once approved, you can gain access to your financing within a few days.

Your credit score will play a big role in determining whether you qualify for a business line of credit and what interest rate you'll be offered. Generally, you'll need a credit score of at least 600 to qualify for a business line of credit. However, if you have a higher credit score, you may be able to qualify for a lower interest rate.

Interest rates on business lines of credit can vary widely depending on the lender and your creditworthiness. However, in most cases, your rate is comparable to a business credit card, which is often more than a traditional business loan.

How to Get a $200k Business Loan

1. Determine the Type of Financing Best for Your Business

Before you apply for any type of financing, you’ll need to determine the type of financing that best suits your business.?

There are many options available, so you’ll want to conduct thorough research before making any commitments.

If you’re unsure of which options are better suited for your needs, get in touch with Llama Loan today and our experts can help guide you.

2. Assess Your Business's Finances

Before you apply for a loan, you should assess your business's finances to ensure that you have a strong financial footing and a reasonable credit score.?

Lenders will look at your annual revenue, tax returns, financial statements, bank statements, and credit score when determining your eligibility.

Depending on your situation, this may help guide the type of financing that works for your business.

For example, if your business lacks a strong credit score but has steady revenue, a merchant cash advance might be your best option. However, if you have strong credit and some collateral to supply, you might explore a traditional term loan to save money on your financing.

3. Choose a Lender

Once you've determined the type of financing that best suits your business and assessed your finances, you’ll need to find a lender.?

At Llama Loan, we offer industry-leading rates and terms on all of our financing options, allowing you to save money and grow your business. From SBA loans to equipment financing, and more – we have all of the business loan options that might suit you best. Get in touch with us today to secure your $200,000 business loan today!

4. Gather Required Documents

To expedite the process and avoid any delays, be sure to have all of the necessary documentation to show that your business is financially stable. You can always check with your lender to see what documentation they need to get ahead. This typically includes items like profit and loss statements, tax returns, bank statements, and a well-structured business plan, which give the lender a better idea of your business’s health.

5. Submit Your Application

Once you've gathered all of the required documents, you can submit your loan application.?

The application process may vary depending on the lender, but you'll need to provide all standard information about your business, including its name, address, and type of business.

Once you've submitted your application, you'll need to wait for approval. Lenders may reach out for additional information or clarification during this time, so it's crucial to be responsive and available to expedite the review process. The duration of this phase can vary depending on the lender and the complexity of your application, but staying in touch with your lender can provide you with updates and help manage expectations.

6. Sign Loan Agreement

If your lender approves your application, the next step is signing the loan agreement.?

This document lays out all of the details of your financing including the interest rate, repayment schedule, collateral requirements, and other essential terms agreed upon by you and your lender.?

Before you sign, it is critical to thoroughly review each section of the agreement. If you’re unsure about a certain section, reach out to your lender for further clarification. If you’re still uncertain, you can consult with a lawyer for additional guidance.

Once you’ve agreed to the terms of the financing, you can sign the agreement and have the funds disbursed to your bank account within a few days.

Closing Thoughts

While getting approved for a $200,000 business loan isn’t always easy, there are plenty of financing options you can use to get the financing you need.

If you’re ready to explore your options, get in touch with Llama Loan today and let our experts guide you through the process!