FAQ's
Useful consumer information about Business Loans.
A hard money loan is a loan acquired through a private lender instead of through a traditional bank. Hard money loans are typically asset based, which means our primary focus when determining a loan amout is based mostly on the value of the collateral itself.
We base our approvals on the quality of the property, the experience of the borrower, and the overall likelihood that the project will be successful. While we do review credit history, it is not the primary component of our decisions, and many borrowers with damaged credit are able to be approved.
At the beginning of the loan process, we will typically ask for much of the same documentation that a bank would require; however, unlike a bank, we don’t ask for this documentation to look for reasons to say “no”. We use common-sense underwriting principles to examine the character, experience, and capacity of each borrower, and have flexibility in our documentation requirements. Your online pre-approval letter will contain the list of documentation requirements applicable to your loan request.
The subject property you are requesting a loan for will be used as the collateral and personal guarantee.
Qualifying for a Line of Credit is not as difficult as you might think! Depending on the amount you are looking to secure, there are minimal criteria that you must meet (perfect credit not required!), including: You must have a personal credit score of at least 650 You must have established business credit Your business needs to have been operating for at least 2 years You need to have an average annual revenue of $180,000.
In most cases, there will be a hard credit pull performed when you apply for a line of credit to determine your credit limit, so just applying can have a short-term negative impact on your credit score. In addition, line of credit lenders typically report to the three major credit bureaus, which can help to increase your score when payments are made on time. Finally, the amount of your revolving credit line that you use at any given time can have an impact on your credit utilization ratio (similar to the way a credit card would), which does count for 30% of your credit score in the current models used by FICO.
A business line of credit works similarly to a credit card. You will be approved for a certain amount and you will be able to draw on and repay funds as many times as you wish, so long as you don’t exceed your credit limit.
Payment terms for a line of credit are very similar to those that you see with a credit card or other revolving credit options. You only pay the principal and interest on the part of the line that you’ve used. Once you’ve paid back what you’ve drawn, that amount is available for use again. Different from credit card payments, is that your payment schedule can be daily, weekly, or monthly (though, it usually falls under weekly or monthly payments), depending on the product you select.
Getting approved for a line of credit can be an extremely quick and painless process. As long as you have all your documentation ready to submit, you can get approved within 24 hours. Upon approval, you can expect to get access to your credit line, again, within 24 hours.
Overall, the size of your credit line is dependent on what you plan to use the funds for, and only you can determine this amount. However, it’s important to remember that the size of the line that you would like to get and what you are approved for may be very different. When determining your credit line size, several factors are considered, which can include: 1. Your revenue 2. Your time in business 3. Your business and personal credit scores 4. Your industry Lines of credit arranged through Kovo Capital can range from $10,000 to $250,000.
There are a few major differences between a business line of credit and a business credit card. For starters, a standard business credit card functions similarly to a personal credit card, in that you can’t just draw cash directly from the card account into your operating account to cover an expense (i.e. you can’t use a business credit card to cover your payroll). When it comes to credit limits and terms, business credit card approval is mostly based on your personal credit score. A line of credit, on the other hand, offers more flexibility on approval amounts, typically has lower interest rates, and can be used to pull cash into your operating account to cover operational expenses or address seasonal revenue shortages. There are, however, more defined terms on a line of credit. While a business credit card will continue to revolve so long as you make the minimum payment, a line of credit must be paid back within the amount of time agreed upon with your lender and expires after an agreed period. Both credit cards and lines of credit have a credit limit that can’t be exceeded. If you’re trying to decide between a business line of credit or a business credit card, think about what expenses you are looking to get covered. If the expenses require cash-on-hand, then a business line of credit would be a better option for you. However, if the expenses can be covered with credit, you may prefer to go with a credit card.
Simply put, Kovo Capital Equipment Financing is a loan that you use to purchase business-related equipment. It allows business owners to purchase the equipment they require to keep their business running and successful without the need to pull from existing working capital.
Equipment financing is, actually, a type of business loan. Similar to the traditional business loans that you are used to seeing, Kovo Capital Equipment Financing has monthly payments that include interest and principal over a fixed term. With equipment financing, however, the full equipment cost is paid directly to the vendor/seller upfront.
While both equipment financing and equipment leasing can be used to acquire new equipment for your business, they do have some very distinct differences. The main difference between these two options is the ownership of the equipment. When you use equipment financing, you are purchasing the equipment from a vendor and you are, therefore, the owner of the equipment. With equipment leasing, however, you do not own the equipment outright. Instead, you are renting equipment through a leasing company for an agreed upon amount of time, with the option to purchase at the end of your lease agreement.
Equipment Financing is a collateralized loan that allows you to purchase equipment for business use. There are many benefits to equipment financing, including: Preserve existing working capital Tax advantages through the Section 179 Tax Deduction* Improve your credit score with timely payments An equipment lease is, essentially, a rental agreement between an equipment vendor and a business, where you rent equipment from a vendor for a monthly payment. You do not own the equipment during the lease term (think along the lines of leasing a car for personal use – it’s just like that!). There are many benefits to equipment leasing, including: Preserve existing cash flow Permits regular upgrades to your equipment Tax advantages through the Section 179 Tax Deduction* * Always consult your tax advisor as to any tax advantages that may be available with equipment financing and leasing, as the tax code may change each year (or even mid-year) without notice.
Kovo Capital equipment financing is not just for heavy machinery. In fact, you can finance almost any type of equipment, vehicle or software you need to run your business. Here are just some of the business equipment needs that you can get covered: X-Ray Machines, Autoclaves, CAD/CAM Technology, Dental Treatment Units and more Bull Dozers, wheel loaders, telehandlers, aerial platforms, trenchers, pavers and more Solar Panels and HVAC Units Commercial mowers, front-end tractors, loaders, back hoes, excavators and more Forklifts, workbenches, flow racks, case sealers, conveyor belts and more Office furniture Trailers, delivery vans, company cars, food trucks, Commercial ovens, freezers, refrigerators, grills, food processors and more
Section 179* of the tax code allows small businesses to deduct the full amount of the purchase price (up to certain limits) of general business equipment. This deduction allows you to substantially lower the amount that you pay for business equipment. You can see additional benefits when your new equipment is leased or financed using Section 179 qualified financing. To be eligible for this deduction, you must have purchased/ leased/financed your equipment and have it placed into service during the year in which you plan to take the deduction. This use-it-or-lose-it write-off is a great incentive for businesses to purchase, finance or lease the business equipment they need. However, ever-changing federal and state tax laws and tax and stimulus acts can always affect Section 179, so it is critical to speak with your accountant PRIOR to a purchase to determine whether or not your equipment meets eligibility requirements for these tax benefits. * Always consult your tax advisor as to any tax advantages that may be available with equipment financing and leasing, as the tax code may change each year (or even mid-year) without notice.
Absolutely. We understand that each business is unique. We work closely with you to tailor a financing solution that aligns with your goals, budget, and preferences. Don’t miss out on the opportunities that equipment financing can provide for your business. Contact us today to explore your options and empower your business with the latest equipment and technology.
At this time, the minimum credit score requirement for our small business loans is 625.
When calculated, our small business loans have competitive industry rates. However, our loans don’t technically have a rate; instead, we charge one fixed price that does not change. Our pricing may change depending on a number of factors, including your credit score, revenue, your industry, and terms of the loan you choose. Because our loans are short term, when you calculate the “rate,” it will be higher than some other options, but the overall cost is often much less than long-term financing options such as SBA loans or equipment financing.
Depending on which financing products you qualify for, Kovo Capital offers up to a five-year term and monthly, bi-weekly, weekly, and daily payment options. However, many of our customers use our business loans for short-term working capital needs and opt for a shorter payback period, making daily or weekly payments.
There are many differences between a general business loan and an SBA loan. The most obvious of these differences is that an SBA loan is backed by the Federal Government, which takes some of the risk associated with the loan away from the lending institution, resulting in much lower interest rates. However, because the loan is backed by the government, qualifying is much more difficult, and the application and approval processes are much longer. In fact, approval for most non-PPP SBA loans is contingent on a business owner having exhausted all other financing options along with being able to show that they have invested their own time and money into the business.
Small business loans can be used for virtually any purpose – from covering day-to-day business expenses to purchasing new equipment to refinancing existing debt. However, with a wide variety of financing options available to business owners, you should always do your research on which financing options are best for each of your needs. For example, just because you can use a business loan to purchase equipment does not mean that you should, equipment financing may be a better fit.
During the 2008 recession, online lenders gained prominence as an alternative option for many small businesses to obtain financing when traditional bank funding opportunities dried up. Since then, these lenders have become a common-place resource for business funding. While your specific needs should dictate where you seek financing, there are some well-known advantages to using alternative lenders, including: Qualification Requirements: Alternative lenders tend to have less stringent requirements for approval. Typically, alternative lenders have lower requirements for an applicant’s revenue, time in business, and credit score. Shorter Timelines: Because of the applications are shorter and fewer documents are required for underwriting, alternative lenders can review, approve and fund business loans in a matter of days – sometimes even in as little as 24 hours depending on how quickly you’re able to get your full application package submitted. Loan Size Flexibility: Alternative lenders have more flexibility with the funding amounts they will approve, so they are able and willing to finance both smaller and larger amounts than traditional lenders. For example, many banks will not consider loans above $1 Million and the use of those funds is often limited. However, with many alternative lenders, loans are available in amounts up to $5 Million and the funds can be used for any business purpose. If you need less capital, many banks aren’t as willing to lend out lower amounts because it is not economically feasible for them to do so, while alternative lenders are willing to finance amounts as low as $10,000. Higher Approval Rates: Because of their easier qualification requirements and simpler application process, alternative lenders approve financing for more small and medium-size businesses than traditional lenders.
