What to Know Before You Owe

Wednesday, June 03, 2015

At Heartland, we know that small business owners can face multiple hurdles in obtaining traditional loans. If your dream is to expand to that second location or you want the reserve funds to ensure that your small business runs smoothly from day to day, Heartland has the lending options you need.

Because we wholeheartedly believe in transparency we have outlined other popular financing sources available. Below we highlight exactly how transparent or hidden the true costs are, as well as evaluate risk and speed. We invite you to investigate these options, but remember when doing your research to compare offers and make sure all terms, conditions and real costs of financing are totally clear to you.

Community Banks and Credit Unions 


Appropriate for: Well-established businesses | Excellent credit holders | Serial entrepreneurs 

– Requires near-perfect credit as well as collateral and personal guarantees, especially if this is your first business venture.
– Process can take more than a month and is commonly delayed.




Appropriate for: Artistic projects | Proof of concept | Young startups

– Red flags include the inability to raise funds in time and the legal grey area of how you repay capital. Free meals? Credits? Good karma?


Investors and “Silent” Partners


Appropriate for: Tech startups | New entrepreneurs | Growing restaurant and retail concepts 

– The upside is that you often do not have to repay the money invested.
– The downside is that giving up an ownership stake may result in “silent” partners not living up to their title and interfering with business operations.
– Transparency? Honesty? Forget about it. Freebies? Bossing the staff around? Complaining? Count on it.

Merchant Cash Advances (MCA) 

Appropriate for: Independent restaurant owners | Small retailers | Innkeepers and limited-service hoteliers

– Rates are higher than what banks charge, but there is less paperwork, and they can’t go after your house or other assets if you default.
– Terms are confusing and true costs are not clear.
– The primary risk is that your cash flow won’t be adequate to sustain the rapid repayment schedule and still support day-to-day operations.


Peer-to-Peer Lending 


Appropriate for: Young startups | Excellent credit holders | Small loan amounts

– Competitive rates (though not as low as traditional bank loans).
– Considered “consumer” debt on your personal credit report.
– Credit score could plummet, making it impossible to secure future financing.


SBA-Backed Loans


Appropriate for: Well-established businesses | Excellent credit holders | Serial entrepreneurs 

– Must prove you have sufficient cash flow for long-term repayment.
– Must have impeccable, professionally prepared financial statements (be ready to jump through hoops to provide supporting documentation).


Heartland Lending: A Transparent Alternative

We are changing the way small businesses think about financial growth. Heartland and its lending partners provide—without hesitation—crystal-clear loan terms and repayment schedules. We are the best solution in the market because we are advocates for our customers. Our lending specialists are dedicated to finding you a low-risk solution to meet your needs. When it comes to speed, we work to get you what you need, when you need it and at the best rates possible. Our mission isn’t to nickel and dime you, but to help your small business thrive, expand and succeed.

Learn how Heartland Lending does things a little differently