What Type of Business Loan Do I Need?

Getting a business off the ground takes hard work, initiative, and funding. Keeping that business going regardless of what comes your way requires even more dedication—and funding. Small businesses are the backbone of our economy, comprising 99.9 percent of all businesses in the United States, according to the Small Business Association.

Non-profit organizations also offer enormous value to our community. Choosing the right commercial banking option for your organization can ensure you have the funding you need now and in the future.

Here’s a look at business loan options, how to decide on a loan product, and how your local community bank in South Carolina can help.

Types of Business Loans
Types of Business Loans

Whether you have a new business, an established business, or a non-profit organization, there are loan products that are designed to meet your needs. The right type of loan for you depends on your budget, your credit, and what type of organization you have. Here are some popular business loan options:

Business Term Loan

This is a “traditional” loan, where your organization receives a lump sum in exchange for monthly payments. This loan is best suited for established businesses and non-profits, but newer organizations may be able to qualify as well.

Business loans typically have a term of one to five years, and the interest rate can vary. These loans can cover a range of business needs, including expansion or purchasing equipment. Some business loans may have a pre-payment penalty, so keep that in mind as you review options.

Longer term loans may be available to assist with real estate purchases or the expansion of existing real estate necessary to support business growth. Different terms and rates may apply to each situation, and a local banker can be a great asset to help a small business make this most important decision.

Business Line of Credit

A business line of credit provides immediate funding for your organization. Your organization can access the credit line when you need funding, and then repay what you borrow. For example, if your organization is approved for a line of credit of $150,000, and your organization needs $50,000, you can withdraw the $50,000 and then repay the $50,000 with interest. If another expense comes up, your organization can borrow again, up to the credit limit.

Both businesses and non-profits can benefit from a line of credit. This form of funding works well for seasonal cash flow issues and emergencies. Most lines of credit are set up for interest only payments monthly and are annually renewable. They can be customized based on the unique needs of the Borrower.

Personal Loan for Business

You can take out a personal loan for business purposes. Some prefer not to go this route due to the intermingling of personal and business funds and that the loan reports to your personal credit rather than your business credit. Newer businesses and organizations that don’t have an established financial history may find it easier to obtain a personal loan, though. Personal loans are usually for lower amounts than you can borrow with a business loan, but the interest rate may be lower as well.

How to Decide on a Business Loan

How to Decide on a Business Loan

Whether you run a for-profit business or a non-profit organization, it’s critical to take the time to carefully review your commercial banking options. To decide on the right funding organization, consider taking the following steps:

  1. Identify what you need and what you can afford. Be specific about why you need funding and how the funds will be spent. Your organization may need funding for a variety of reasons, including expanding into a new location, needing new or specialized equipment, or needing new furniture for the office. Review your organization’s finances and decide how much you can afford when it comes to loan repayment. Any debt you take on should grow your organization, and you should be able to comfortably repay your loan.
  1. Prepare for loan applications. Business loan applications require documentation. Gather the relevant financial documents from the past three years, including business bank statements, profit and loss sheets, and personal and business tax returns. Keep in mind that your personal credit score may impact your ability to get a business loan, especially if your business is new. Take steps to improve your personal credit, if needed, to improve your chances of approval.
  1. Talk to an expert. It can be difficult to determine which funding option will truly move your organization forward. Consider talking to someone with expertise in business and non-profit lending, such as a loan officer at your local community bank in South Carolina.
  1. Review your options. Take the time to get a few options for funding. Look at the interest rate, the repayment terms, whether there are any fees, and whether there are any prepayment penalties.
  1. Choose the option that works for you. Once you review your options, choose the loan option that makes sense for your organization.

When it comes to business funding, there is no one-size-fits-all solution. A good lender will carefully listen to your organization’s needs and goals, and then connect you with products that meet those needs.

Your Partner in Growth

Your Partner in Growth

At Arthur State Bank, we offer business lending with a personal touch. We are a proud community bank with deep ties to our communities. We’ve been serving businesses and families since 1933, and we’re ready to serve you. Contact us today to find out more about our business lending options.

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AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.


Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.


Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:


Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.


Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.


Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.


  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.


Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.


Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.


Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.


Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
  • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.