Finance & Lending

Equity financing is a type of business funding where a company gets money by selling a percentage of ownership to investors. This is different from debt financing where businesses borrow money from lenders and pay it back with interest and the business owner retains ownership of the company.  Unlike small business loans, equity financing doesn’t have a requirement to pay anything back. Investors… Read more »

Debt financing is a term that describes any type of borrowing money where the borrower makes payments to the lender with interest, whether automatically applied or as a term for late payments. It gets its name because the borrower has a “debt” to the lender.   It’s the preferred method of financing for most businesses as the business owner or owners maintain control over the… Read more »

Soft inquiries, also known as soft pulls, are when someone looks up your personal or business credit score on your credit report with one of the three credit bureaus to see how creditworthy you are. Soft pulls are normally done when you apply for a job, when a company or research firm is interested in marketing to you, or any other… Read more »

A personal guarantee is a legal commitment where the borrower guarantees they will be personally responsible for any debts in case of default on a small business loan. Personal guarantees create a personal liability for the debt rather than pledging specific assets as collateral.    It is very common for lenders to require a personal guarantee, including when the borrower is “creditworthy,” meaning they have strong financials and a good… Read more »

The Debt-to-Income (DTI) ratio measures how much of a borrower’s gross monthly income remains after paying down debt. Lenders use this ratio to gauge whether the borrower has enough disposable income to take on new debt obligations and still maintain their lifestyle. The ratio measures a borrower’s total required monthly debt payments on consumer credit… Read more »