The recent pandemic has left many businesses in Houston without clients and forcing them to close. This is affecting not only the owners but also the employees that were relying on their paychecks to survive.
That’s why the US government was forced to come up with the recent $2.2 trillion stimulus to help the economy and offer small businesses a lifeline by providing up to $350 billion for new loans. The only problem is that the big banks are taking too much time to review and approve these new loans. Also, these institutions will most likely service their existing clients first, create a big backlog of requests and finish the money before accepting new loans. And because each financial institution has a borrowing cap, some end up closing the loan windows in just a few days, similar to what Wells Fargo has done.
That’s why the government has pushed the attention to alternative lenders that can provide quick loans for amounts between $5,000 and $350,000. Some of the best-known lenders in the Houston area are listed below, so go and have a look at their terms and see how they can help your business.
The COVID-19 crisis is far from being over. As a matter of fact, it seems that this health crisis that has hit us out of the blue is poised to rip through the American economy and literally destroy millions of businesses, leaving tens of millions of employees without a job. According to Forbes, over 200,000 retail companies are on the verge of collapse, while millions of other small businesses are facing unprecedented struggles because of a lack of liquidity.
The Problems Small Business Owners Face During COVID-19
As the digital trend continues and a growing number of companies are shifting online, mom-and-pop stores are finding themselves facing a grim prospect. First of all, they have no more clients, because almost everyone is stuck at home. Second, they have extra stocks of products they cannot sell, and most of the perishable goods are expiring. Third, even if some stores still have customers, they have a hard time supplying their stores, as tens of thousands of factories have halted their production.
The entire distribution chain is affected, starting from the manufacturer to the end customers. Small business are stuck in between and they seem to be losing money by the day. While the US Government is poised to give money to small business owners, releasing a $350 billion package to come to their aid, this entire package could only be available after several weeks. A quicker solution is leveraging the benefits offered by small business loans Houston (SBA loans).
What are Small Business Loans?
All companies based in Houston are eligible for a quick business loan that gets instant approval. Compared to bank loans, which take an eternity to get approved and require a lot of documentation, an SBA loan gives you the cash flow you need within days.
In order to qualify for an SBA loan, you need to ensure you meet certain criteria:
– You have a good personal and business credit score: the credit score is based on several factors, including the payment history, the amount owed, time since you had credit, recent credit inquiries and types of credit in use. As a small business owner, you need to prove that you can properly manage debt and that your business credit score is up to par.
– Meet the minimum qualifications: each lender has its own criteria for borrowing money. If you also want to take a small business loan Houston from a lender that is backed by the U.S. Small Business Administration, you might have to meet extra requirements.
– Gather all the legal documents needed: you might need to prove that you need help. In addition to the standard documents, which include business licenses, personal and business bank statements, articles of incorporation and balance sheet, you might also have to show some documents that show that you have been directly affected by the COVID-19 crisis.
– Develop a strong business plan: next, you need to be able to show the lenders that you’ll use their money strategically in order to grow your company. You might want to pay your employees or rehire them, pay a new supplier or simply relocate into a new facility.
– Provide collateral: lastly, in order to qualify for the best small business loans Houston, you might have to provide collateral, which could be a building, an asset, a vehicle, an expensive machine, or any other inventory that can be seized and then sold by the lender should you fail to repay the loan.
Secured vs Unsecured Loans
As a rule of thumb, a secured loan involves collateral. In this case, the lender can take possession of your piece of property. Conversely, unsecured loans are not tied to any collateral, so the lender is not able to take anything from you. However, unsecured loans typically come with a higher interest rate and offer lower borrowing limits.
During the COVID-19 crisis, it is best if you aim for secured small business loans in Houston. However, it lies in your own power to leverage online shopping and trying to migrate your physical store online. At a minimum, you should have a website and offer deliveries at home.