A Quick Guide to the Best Business Loans for Sole Proprietors
March 3, 2023
Are you just starting a business? Many people, such as freelancers, photographers, consultants, and home-based business owners, operate their businesses as sole proprietorships.
What is a sole proprietorship?
A sole proprietorship is an unincorporated business owned by a single person. This is the easiest way to profit from a side hustle because all the profits are yours to keep as income, making this the simplest type of business structure.
At New Valley Bank, our mission is to provide person-to-person banking for the people and small businesses that make our Massachusetts communities thrive—including sole proprietors.
What are my financing options as a sole proprietor?
There are several types of funding you may be eligible for as a sole proprietor. This includes:
1. SBA loans
The Small Business Administration (SBA) provides microloans to help small businesses get the funds they need. The maximum amount loanable is $50,000, while the average amount is $14,000. If you have good credit and a small budget, this may be the right option for you.
2. Business credit card
Business credit is not a loan, but rather a form of open-ended financing that can be used as needed. Interest is applied to any balance that is carried month-to-month, however, this can be avoided if the full amount is paid every month. Sole proprietors can find great benefits in business credit cards as they are easier to qualify for compared to other forms of financing and can even be obtained before a business is officially opened. (Please note: This card is issued by TCM Bank and is subject to credit approval.)
3. Business line of credit
A business line of credit is similar to a business credit card, but with different rewards. The amount of credit you are approved for is based on your credit history, income, and other qualifications. The big benefit of a business line of credit is that you may be able to get a larger amount of credit than with other methods.
4. Term loan
Term loans provide the means to borrow a fixed sum of money, with repayment periods ranging from eighteen months or less for short-term and up to five years or more for long-term loans. When applying for a term loan, it is important to consider the minimum and maximum loan limits, interest rates, and any additional fees. Such loans are suitable for both short-term and long-term expenses, such as payroll and insurance premiums for short-term, or expansion and product line expansion for the long term.
How to apply: business loans for sole proprietors
Want to turn your side hustle into the business of your dreams? Now it’s faster and easier than ever to apply for a small business loan! You can get answers with the click of a button. Once you’re ready to apply, complete the loan application and upload all of the supporting documents. We support the majority of industries, provide flexible lending terms, and make borrowing easy. Or, you can call, text, or reach out online. We’re here 24/7 to help!