How To Get a $250K Business Loan

Important Notice: For SBA Paycheck Protection Loans consider Fundera

How To Get a $250K Business Loan:

Part of being a successful business owner is having enough working capital. If you are searching for a $250,000 business loan, we can help you. Prior to applying for a loan, you should review your credit report. Keep in mind, that credit reports can change weekly and credit scores are determined by more than just on-time payments. While payment history is one of the largest categories assessed to determine a credit score… credit utilization, age of credit history, credit mix and credit inquiries are also taken into account. Different types of business loans can have different credit requirements. Let’s compare 3 main types of business loans:

• Term Loans

Term loans and lines of credit can have some of the lowest credit score requirements. The minimum required credit score for business term loans can start at just 550. Most lenders require that borrowers provide profit and loss or bank statements as proof of revenue. Using a term loan, business owners can borrow between $5,000 to $2,000,000 and receive funds as soon as 24-hours. In most cases, interest rates start at about 6% and terms are offered between 1-5 years for repayment. 

• » MORE: Compare Term Loans

• Line of Credit

The minimum credit score requirement can be just slightly higher for a line of credit - starting at 560. Most lenders require that borrowers prove at least $25,000 - $50,000 in annual revenue. Business lines of credit can be compared to business credit cards. Rather than having a lump sum of cash deposited at the beginning of the loan, business lines of credit simply allow you access to money that can be used for business expenses. Once you withdraw funds, interest begins to accumulate. Business lines of credit are commonly used for operational expenses including supplies, payroll, or increasing inventory orders.

• SBA Loans

Compared to other options, SBA loans can require higher credit scores, longer approval processes, and more strict requirements. The minimum credit score requirement for most SBA loans is a 620. The minimum credit score requirement can vary depending on the type of SBA business loan you are trying to obtain. In addition, most borrowers require at least two years of business tax returns - at the very minimum. As we mentioned above, the requirements for an SBA loan can be very strict. A detailed business plan, no passed default accounts, explanation of loan purpose, time in business, proof of insurance, desired loan amount, and more is usually required by the lender in addition to tax returns.

Compare SBA Loans

What Are The Interest Rates For $250,000 Small Business Loans?

No matter what kind of loan you decide to use, interest rates can vary depending on the amount borrowed and repayment terms. SBA loans are in high demand for business owners because of their low interest rates and flexible terms. However, since they can be challenging to get you may want or need to consider other options. Let’s compare interest rates for different types of $250,000 business loans...

• SBA vs Term Loans

In addition to higher borrowing amounts, SBA loans can also offer longer loan terms and lower interest rates than term loans. You may be more familiar with term loans than you realize. If you have ever financed a vehicle or taken out a mortgage, you have most likely used a term loan. Terms loans typically allow you to borrow up to $1,000,000 while SBA loans can allow you to borrow up to $5,000,000. Most SBA loans are offered with terms between 5-25 years and interest rates between 3.63%-13%. Most term loans are offered with terms between 1-20 years and interest rates between 7%-30%.

SBA vs Conventional Loans

 

• Lines of Credit vs SBA loans

Lines of credit can be borrowed from traditional banks and online lenders. The SBA also offers lines of credit through their CAPLines Program. If you are trying to solve a cash flow problem or need working capital, you may want to consider a business line of credit. Compared to an SBA loan, you are only charged interest on the money once you withdraw it from your line of credit - as opposed to paying interest on the total amount borrowed. Lines of credit can have high borrowing amounts and interest rates between 5%-20%. 

SBA Line of Credit Options

What Type of Business Loan Is Best For $250,000?

• Unsecured vs Secured Loans 

Unsecured loans may have higher interest rates but are less risky for the borrower. Using a secured loan can save you an average of 5%-6% on your interest rate. When you borrow a larger amount like $250,000, a slightly lower interest rate can translate to a lot of savings. Before selecting an unsecured or secured loan you should evaluate your situation.

• Term Loans

Terms loans can be a safe option for $250,000 business loans. They usually have pretty simple terms and little to no limitation on how the money can be spent. You should have lots of offers when it comes to term loans making it important to compare offers and do your due diligence. Interest rates typically start around 6% for term loans. 

• Equipment Loans

Equipment can be essential for businesses to generate revenue and grow - but equipment can be expensive. This is where equipment loans can help. Equipment loans can help you finance the equipment you need while helping to build your credit. Businesses can borrow up to $250,000 with most equipment loans. Interest rates usually range between 2% to 20% on equipment loans.

Compare Equipment Loans

 

• Lines of Credit

If your business needs $250,000 cash now, you should consider a term loan, secured loan, or unsecured loan. Lines of credit are designed to help cash flow problems and provide working capital. Similar to a business credit card, business lines of credit make cash available at any time but interest is not charged until the money is used. Interest rates usually range between 5%-20% on business lines of credit.

Compare Line of Credit Options

 

• Merchant Cash Advance

While a merchant cash advance can provide the money you need, it can come at a high price. Before considering a merchant cash advance you should exhaust other financing options. Merchant cash advances usually have a lot of fees and require daily or weekly payments until the advance is paid in full.

Merchant Cash Advance Options

What Are The Requirements For SBA Loans Up to $250,000?

SBA 7(a) loans can be used for $250,000 business loans. SBA loans are backed by the government and designed to help businesses thrive and grow rather than drown in debt. If you are using an SBA 7(a) loan for working capital you can receive terms up to 7 years. Their low-interest rates, flexible terms, and high loan amounts make them an attractive option for business owners. The application process for SBA loans can be lengthy due to all the requirements. 

SBA 7(a) Loan Requirements:

• Good to excellent personal credit score
• Solid business revenues and profits
• Business plan
• Collateral 
• Must be a for-profit business
• Must meet SBA small business size standards (industry-based)
• Business must be located and operated in the U.S.
• Sufficient time in business

What Are The Best $250K Business Loans?

#1. SmartBiz

SmartBiz offers SBA and non-SBA business loans. SmartBiz offers SBA loans between $2,000-$350,000 with terms between 0-7 years. SmartBiz highlights competitive interest rates and a fast funding period. Borrowers need to meet the minimum credit score requirement of 650 to qualify.

» MORE: SmartBiz SBA Loan Review

#2. OnDeck

OnDeck offers traditional business loans up to $250,000 with terms between 2-4 years. Most OnDeck loans require a personal guarantee or a lien on the assets of the business. OnDeck highlights a low credit score requirement of 600, less paperwork than other lenders, and fast funding times. 

#3. BlueVine

Similar to OnDeck, BlueVine offers traditional business loans. Although they are known to have higher interest rates, they can help businesses that are less than one year old. In addition, they also have a low minimum required credit score of 600. BlueVine offers business loans up to $250,000 with terms between 2-5 years.

#4. QuarterSpot

QuarterSpot specializes in short-term business loans for bad credit borrowers. However, compared to the other lenders on our list, QuarterSpot usually has higher interest rates. Borrowers can qualify with a minimum credit score of only 550. Most approved loans require a personal guarantee. 

Compare Business Loans

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