If so, you are in the right place! Get started by entering your personal confirmation number below.
Received an offer from us?
If so, you are in the right place! Get started by entering your personal confirmation number below.
Leaving SoFi Website
You are now leaving the SoFi website and entering a third-party website. SoFi has no control over the content, products or services offered nor the security or privacy of information transmitted to others via their website. We recommend that you review the privacy policy of the site you are entering. SoFi does not guarantee or endorse the products, information or recommendations provided in any third party website.
By Sam Soland |
|
Comments Off on Do Americans Have Too Much Money in Stocks?
This article appeared in SoFi's On the Money newsletter. Not getting it? Sign up here.
Americans are more invested in the stock market than ever before. Stocks accounted for a record 45% of assets held by U.S. households and nonprofits in the second quarter of this year, according to Federal Reserve data. To put that in perspective, it was about 10% 40 years ago and in the 30% range before the pandemic.
On one hand, this is a milestone worth celebrating: Investing is no longer an exclusive club for the wealthy. Greater access through workplace retirement plans and easy-to-use investing platforms have allowed more people to get in on it.
And stocks are having a great run, pushing benchmarks to new record highs over and over again.
But with this much riding on the market, what happens if it falls?
At the Mercy of the Markets
It’s a good question to ask ourselves, given not just the record investment levels, but how concentrated the market is now. In 2010, the 10 largest companies in the S&P 500 made up about 19% of the index, — the broadest to track the U.S. stock market.
Today Nvidia, Microsoft, Apple, and the other top 10 companies account for about 40% of the index, more than than the entire tech sector did just 15 years ago.
Much of the market’s growth has been driven by advances in technology — most recently, enthusiasm for artificial intelligence. Shares of both Microsoft and Google-parent Alphabet have hit record highs this year on the back of their AI activities. But if those companies stumble, the entire market can feel it.
Or there could be another broad sell-off. At the start of the COVID-19 pandemic, the stock market experienced some of the sharpest drops in history. And earlier this year, the S&P 500 briefly fell into bear market territory amid news of steep new tariffs on imports.
Although the stock market has generally moved higher over the long-term, these tougher times can make investing feel perilous.
Why Diversification Matters
One way to counter these risks is to avoid putting all of your eggs in one basket. Diversifying means you reduce concentration risk by spreading investments across different assets, industries, or regions, so that poor performance in one area may have less impact on your overall portfolio. Because not all investments move in the same direction at the same time, you may be able to offset losses in one area with gains in another. This balance can help protect against large losses tied to any single investment.
“If everything in your portfolio is crushing it, you likely are not diversified enough,” says Brian Walsh, SoFi’s Head of Advice & Planning.
There are many different ways to put your eggs into different baskets. You can diversify your portfolio by:
• Region: Mix U.S. and international stocks to balance local and global growth.
• Sector: Add exposure to industries with different strengths and weaknesses. Manufacturing might be more influenced by the economic cycle, for example, while retail might be more sensitive to inflation.
• Basic asset type: Combine generally riskier stocks with more stable bonds.
• Alternative asset types: Add assets like real estate, commodities, or private investments for even broader exposure.
And funds that track assets in different parts of the market, like mutual funds or exchange-traded funds, make it easy to provide diversification to your portfolio.
So what?
With so much of wealth wrapped up in stocks, major market moves have the potential for dramatic impact. And that may test the resolve of even the most committed investor. Concentration is a real risk, but a well-diversified portfolio can help you stay resilient and focused on your long-term goals, no matter what the headlines say.
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
Diversification can help reduce some investment risk. However, it cannot guarantee profit nor fully protect in a down market.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
By Al Lewis |
|
Comments Off on Would Your Finances Pass a Stress Test?
This article appeared in SoFi's On the Money newsletter. Not getting it? Sign up here.
If life throws you a layoff, a big medical bill, or a major house repair, you want to know you can handle it. But what does financial resilience actually entail?
It’s not about being rich. It’s about being ready.
While a recent survey by NerdWallet found Americans are more likely to feel financially resilient when they earn over $100,000 and own a home, it also showed that there’s more to it than financial resources. Just as important is how well you manage your money and can adapt to setbacks, surprises, or even opportunities.
Here are some telltale signs your finances would pass a stress test:
1. You’ve got a cushion to fall back on
An emergency savings stash is the backbone of financial resilience — a safety net to help you get back on your feet when times are tough.
Financial advisors often recommend having enough saved to cover three to six months’ worth of living expenses. But it’s better to start small than not start at all. For example, you could set up automatic transfers to a high-yield savings account, even if it’s just $20 a week. Thanks to the power of compound interest, that could make a big difference over time. And even a smaller buffer can reduce stress and prevent small problems, like an unexpected vet bill, from snowballing into bigger ones.
2. You keep debt under control
Debt isn’t necessarily a bad thing, but the type and size of it matters. Financially resilient households tend to have low or manageable debt, especially when it comes to high-interest debt from credit card spending. Credit card debt can get out of hand when you make only the minimum required payment, and ideally you’re able to pay your bill in full each month.
One rule of thumb is to keep your total monthly debt payments under 36% of your pre-tax income. If you’re over that threshold, focus on paying down the highest-interest balances. Momentum matters. Each bill you eliminate frees up cash flow and delivers more peace of mind.
3. You have a strong credit score
A good credit score doesn’t just signal responsibility, it provides options. If an unexpected bill pops up, access to affordable credit can be a lifeline. A strong credit score could also save you thousands in interest per year on loans like mortgages and car loans. Even insurance premiums may be lower.
You don’t have to have a six-figure salary, but predictability helps you plan, save, and avoid expensive debt. People with either steady or multiple income streams tend to weather shocks better than those with unsteady pay, but that doesn’t mean that freelancers, gig workers, or business owners can’t feel financially resilient.
If you don’t have steady income, building resilience might mean creating your own version of stability, like budgeting around your lowest-earning month and saving the difference when times are good.
Whatever your income is, the important thing is that you live within your means.
5. You know where your money is going
Budgeting doesn’t have to mean spreadsheets and stress, but you want to be aware.
It’s important to have a handle on what’s coming in, what’s going out, and where you can pivot if something changes. Nerdwallet’s survey showed people who track spending on a regular basis are more likely to feel financially resilient. And studies suggest that people who track spending report higher financial confidence and less anxiety.
6. You can afford your housing, whether you own or rent
Homeownership usually correlates with stability, but it’s not the only path. What matters more is having housing costs that fit your budget. Whether it’s a mortgage or rent, experts recommend keeping total housing costs below 30% of gross income.
7. You understand how money works
Financial literacy might be the ultimate resilience tool. People who understand how risk, inflation, and compound returns work tend to make better decisions, recover faster from setbacks, and enjoy better financial health.
And you don’t need a finance degree, just curiosity. Read credible personal finance resources, listen to a podcast, or follow a budgeting community online. A little knowledge goes a long way.
8. You’re thinking about tomorrow
Retirement may feel far off, but saving for it is part of future resilience.
The ability to handle future financial needs without panic starts with habits you build earlier in life. Contributing even a small percentage of your paycheck to a 401(k) or IRA helps create a financial buffer that future-you will thank you for.
Asking for help isn’t weakness. It’s resourcefulness.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
• A home equity loan calculator estimates the amount a homeowner might be able to borrow based on available home equity and shows what the monthly payments would be.
• Users will need to input estimated home value, current mortgage balance, preferred loan amount, preferred repayment term for the home equity loan, and potential interest rate.
• Home equity loans typically offer fixed interest rates and predictable monthly payments over five to 30 years.
• Before obtaining a home equity loan, it’s important to think about how payment will fit into your budget, how the loan might impact a home sale, and possible tax benefits.
Home Equity Loan Calculator
Calculator Definitions
• Home Value: Find the estimated market value of your home by searching your address on a real estate website such as Redfin or Zillow. For best results, use the current estimated value, not what you paid for your home originally.
• Current Mortgage Balance: This is the amount you still owe on your home loan. It’s also known as the principal.
• Repayment Term: This is the number of years you’ll require to repay your home equity loan. The longer the term, the lower the monthly payments will be, but the more interest you’ll pay over the life of the loan.
• Interest Rate: Interest is what you’ll pay the lender for the privilege of borrowing. The rate is usually expressed as a percentage of the amount you borrow. This calculator serves as a home equity loan rates calculator, because it bases your payment information on your interest rate. Your credit score will play a big role in the rates you’re offered.
• Equity: Your equity is your ownership stake in your home. Lenders typically like home equity loan borrowers to have at least 20% equity in their home. To see your equity percentage, subtract your mortgage balance from your estimated home value, then divide by your estimated home value.
How to Use the Home Equity Loan Calculator
Putting this free home equity loan calculator to work for you is easy, and results are ready in seconds.
Step 1: Enter Your Home Value
Research the estimated value on a real estate site, and type in the middle range of the amount.
Step 2: Enter Your Desired Loan Amount
Home equity loans pay you a lump sum, so add up all the things you might need to borrow for over the next few years and enter that amount. This calculator has a loan limit of $350,000.
Step 3: Enter Your Current Mortgage Balance
Find your current balance on your latest mortgage statement or on your loan servicer’s site.
Step 4: Enter Your Home Equity Loan Repayment Term
Choose the number of years you want to have to repay the home equity loan, from five to 30. The shorter the term, the higher your monthly payment will be.
The calculator will show you the maximum home equity loan you might qualify for, based on your home equity level, and what the monthly payment would be. You’ll also see your desired loan amount and its monthly payment. Apply for a loan amount that suits your needs and that has a monthly payment you can handle. The calculator will also show your equity percentage in the home. If your equity is less than 20% you likely won’t qualify for a home equity loan, but knowing the equity percentage will show you how close you are to the 20% mark.
Benefits of Using a Home Equity Loan Calculator
This home equity loan payment calculator will quickly show you how much you might be able to borrow based on the amount of equity you have in your home, as well as what the monthly payments on your desired home equity loan might look like. You can also use the calculator to experiment with different loan amounts and interest rates to find the monthly payment that best fits your budget.
How to Use the Home Equity Loan Calculator Data to Your Advantage
The home equity loan calculator will show you your available equity amount. It’s helpful to have this number, because this is the amount of the home’s value that you have actually paid off, based on your mortgage principal balance.
It will also show you the estimated monthly payment on a home equity loan. You can use this information to have a close look at your monthly budget and decide whether you’ll be able to afford this payment while still paying off your mortgage and covering your other bills.
With a home equity loan, you’ll start making payments soon after you receive the lump-sum loan. If you determine the monthly payment is affordable, you can apply for a home equity loan. Completing the application will be similar to the mortgage preapproval process you might have gone through when you bought your house.
You’ll provide detailed financial information and information about your property, and the lender evaluating the mortgage preapproval or home equity loan application decides whether or not you qualify for the loan.
What Is a Home Equity Loan?
Before you decide to apply for a home equity loan, it’s important to make sure you understand what it is, and how it differs from other borrowing methods. With the cost of living being what it is these days, you might find you need a loan to accomplish your goals. Maybe you have a kitchen renovation planned, or perhaps you would like to use a lower-interest home equity loan to pay off higher-interest credit-card debt.
A home equity loan uses your home as collateral, providing you with a lump sum of money to use for pretty much any purpose you can think of. If you are still paying off your mortgage, the home equity loan is technically a second mortgage. The funds are disbursed all at once and you immediately begin repaying what you borrowed, plus interest, in equal monthly installments over a period of five to 30 years.
As with the mortgage rate on your home loan, your home equity loan interest rate is driven by market forces and by your personal creditworthiness. Because you’re using your home as collateral, interest rates are typically lower than those of unsecured personal loans. And the home equity loan’s fixed interest rate lets you enjoy the predictability of consistent monthly payments. To qualify, you’ll need at least 20% equity in your primary residence.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
Types of Home Equity Loans
You might hear that there are different kinds of home equity loans, just as there are different types of mortgage loans. It’s really more accurate to say that there are different ways to borrow against your equity. If you pursue a home equity loan, you get a lump sum and repayment starts immediately. Or you can consider one of these alternatives:
Home Equity Line of Credit (HELOC)
A home equity line of credit is like having a credit card but with a lower interest rate. You can borrow money as you need it, up to a certain limit, and pay interest only on the amount of the credit line you actually use.
Unlike a home equity loan, a HELOC has a “draw” period of up to 10 years, during which you can draw against the credit line but only pay interest. After the draw period, you’ll be in the repayment period where you pay back principal plus interest.
One big difference between a home equity loan and a HELOC is that HELOCs usually have a variable interest rate, so the amount you pay in interest will depend on your current balance and your changing rate. Another difference is that your credit line on a HELOC might be slightly larger than the amount you could borrow with a home equity loan. A HELOC could allow you to borrow up to 90% of your equity, while a home equity loan usually tops out at 85%.
Cash-Out Refinance
In a cash-out mortgage refinance, you replace your mortgage with a new, larger one and pocket the difference to use as you wish. The amount you can cash out is determined by your home equity, with most lenders allowing you to borrow up to 80%. The beauty of a cash-out refi is that you can choose between fixed or variable rates, and you’ll wind up with one monthly payment instead of paying for both a mortgage and a home equity loan or HELOC. Here’s a quick guide to a home equity loan vs. a cash-out refinance vs. a home equity line of credit:
Home Equity Loan
HELOC
Cash-Out Refinance
Borrowing Limit
Up to 85% of borrower’s equity
Up to 90% of borrower’s equity
80% of borrower’s equity for most loans
Interest Rate
Fixed
Generally variable
May be fixed or variable
Type of Credit
Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments.
Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest, followed by a repayment period (10-20 years) to repay the principal plus interest.
Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms.
Repayment Term
Generally 5-30 years
A draw period of 5-10 years, followed by a repayment period of 10-20 years
Generally 15-30 years
Fees
Closing costs (typically 2%-5% of the loan amount)
Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees)
Closing costs (typically 2%-5% of the loan amount)
Home Equity Loan Scenarios
As you are thinking about how to get equity out of your home, consider these examples of how things play out when you run the numbers with a free home equity loan calculator.
Scenario One: Homeowner Harris
Harriet Harris purchased a home in 2014 and has made steady mortgage loan payments over the last decade. She still owes about $120,000 on her original mortgage. Her home, located in one of the best affordable places in the U.S., has appreciated nicely, and real estate sites estimate it’s worth about $470,000.
She puts the price estimate and mortgage balance into the home equity loan payment calculator and it shows her that her home equity is $350,000. If her credit score is solid, she could borrow as much as 85% of her equity, or $297,500.
Homeowner Harris only wants to borrow $50,000, and the interest rate right now is 6.90%. She’d like to repay the loan in 10 years, before she retires. The home equity loan monthly payment calculator shows that her monthly payment would be about $600.
Scenario Two: John and Jane Newlywed
The Newlyweds were able to qualify as a first-time homebuyer and purchased their home just last year for $350,000, making a 10% down payment on the property and obtaining a 30-year loan at 7.00% interest. They have been making their mortgage payments steadily.
The home hasn’t appreciated much in value in such a short time, so the home value for the mortgage calculator is $350,000. Their current mortgage balance is $310,500. Using the home equity loan calculator, they learn that they have $39,500 in equity, which equates to about 11% equity in their home. Right now the Newlyweds would probably find it difficult to obtain a home equity loan, as they haven’t yet reached 20% ownership of their home.
Before you move forward and apply for a home equity loan, take our advice on how to get the most out of the experience:
• Build a strong credit score Check in on your credit score before applying for a home equity loan. You’ll want to have a score of 680 or 700 to qualify and get a great rate. Keep up with your payments and don’t max out your credit cards, and you can ensure your score is sterling.
• Know how much you need to borrow With a home equity loan, you’ll ask to borrow a certain amount and, if you qualify, you’ll receive the funds all at once. If you are unsure about how much you need to borrow, a HELOC might be a better choice for you, because you can borrow as you need money.
• Have a payment plan Payments on your home equity loan will begin immediately, so make sure you’ll be able to pay the necessary amount each month. If you can’t make your payments, you risk losing your home to foreclosure.
• Make sure your home is well insured Lenders like to see that a home is well protected before they make a loan against it. If you have any uncertainty about your coverage, you can ask a prospective lender to share its requirements.
• Think about the future If you might be moving before the repayment term on your home equity loan is finished, you’ll need to pay off the home equity loan when closing on the sale of your home, which can affect your profits from the sale. Owing money on both a mortgage and a home equity loan might also affect your ability to qualify for a mortgage if you are buying a new home while selling your old one.
• Understand the potential tax benefits If you use a home equity loan to make significant improvements to your residence, the interest you pay on the loan may be deductible on your 2025 federal taxes. Work with your tax preparer to make sure you document everything properly. Your tax preparer can also keep tabs on how this rule might change in future tax years. Keep receipts and good records of any home-related expenses you pay with funds from the loan.
The Takeaway
A home equity loan can be a huge help if you need to cover the cost of a renovation or education expenses, and the interest rate you can get by using your home as collateral makes this a very appealing way to borrow. But it’s important to understand that your home is at risk if you fail to make your payments. Use a free home equity loan calculator to help ensure your monthly home equity loan payments fit into your budget. Then reach out to lenders to find the best available rate on a home equity loan to keep your expenses to a minimum.
What is a home equity loan calculator and how does it work?
A home equity loan calculator tells you how large a home equity loan you might qualify for, based on your home’s value and your mortgage balance, and estimates your monthly payments for the loan. You’ll type in a few numbers and almost instantly learn your maximum loan amount, equity amount, and monthly payment amounts for both your max loan amount and your desired loan amount. Choose the loan size that works for you and that has a monthly payment you can handle.
What information do I need to input to get an accurate estimate?
To get an accurate estimate from a home equity loan calculator, you’ll need to put in your home’s approximate value (from a real estate site), your mortgage principal balance (from your lender’s site or your mortgage bill), your ideal repayment term (5 to 30 years), and the interest rate you think you might be able to obtain. You’ll also input your desired loan amount.
How does the calculator determine my home equity?
A home equity calculator determines the amount of equity you have in your home by dividing your mortgage principal balance by your home’s estimated value. If your home value changes, your equity level could change too.
Does the calculator consider my credit score or debt-to-income ratio?
This calculator does not evaluate your credit score or examine your debts. If you have a low credit score or high debts, it might be difficult to obtain a home equity loan. A prospective lender will look at your equity level, credit score, and debts when determining whether or not you qualify for a home equity loan and, if so, how much you might borrow.
Is the estimated monthly payment from the calculator the exact amount I will be required to pay?
The free home equity loan calculator provides an estimate of what you’ll be able to pay, but for the exact amount you would owe, you’ll need to check with a lender.
Does the calculator account for closing costs or other fees associated with the loan?
The calculator does not take into consideration the upfront costs or fees associated with a home equity loan. Some lenders offer to waive origination fees on home equity loans.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945. All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Florida has become an economic magnet, with more than 3 million small businesses calling the Sunshine State home. There’s no personal income tax in Florida, and the state’s economy is the fourteenth largest in the world, both of which contribute to its reputation as a business-friendly location.
Whether you’re starting a business or expanding one, finding small business loans in Florida can help you thrive. Here’s what you need to know about getting financing for your company.
Key Points
• The primary small business loans in Florida include term loans, business lines of credit, equipment financing, and SBA loans.
• Application process involves defining loan purpose, checking credit scores, and gathering financial documents.
• Tips for loan approval: improve credit scores, request strategic funding, and create a detailed business plan.
• Additional funding options: state programs, credit unions, and SBA loans for diverse business needs.
• State-specific programs support rural, minority, and Hispanic-owned businesses with various loan funds.
Popular Types of Small Business Loans in Florida
Securing the right financing is a critical step in growing your venture. Whether your goal is a major expansion, managing day-to-day operational costs, or purchasing vital equipment, there are various small business loans in Florida designed to meet those needs. Understanding the structure of each option is the first step in choosing the best path for your company. Below is an overview of the most widely used business loans Florida entrepreneurs can access.
Florida Small Business Loan Programs
The Florida Department of Commerce operates a Small Business Innovation program that includes a number of loans for both new and established businesses. Available loans include:
• Rebuild Florida Business Loan Fund
• Florida Small Business Emergency Bridge Loan
• Rural Community Development Revolving Loan Program
• State Small Business Credit Initiative
• Microfinance Guarantee Program
• Black Business Loan Program
• Prospera (for Hispanic-owned businesses and entrepreneurs)
• Urban League of Broward County
Term Loans
In addition to state financing opportunities, Florida business owners can also explore term loans from banks, credit unions, and online loan marketplaces.
A term loan is structured like a personal loan. The business receives a lump sum and the principal plus interest is repaid to the lender as a fixed payment. A business loan calculator can help you estimate monthly payments based on loan amount, interest rate, and term.
Some lenders require that eligible businesses have a minimum time in business, while others offer startup business loans.
Business Lines of Credit
An alternative to a Florida small business loan is a business line of credit. Instead of receiving one infusion of cash, your business can continually draw on a line of credit to borrow funds as needed. It’s similar to having a business credit card, but you can write checks and deposit cash directly into your business account.
Having access to a line of credit can help smooth out cash flow issues or cover financial emergencies. Depending on your lender, you may have to secure your line of credit with assets like real estate, cash, equipment, or inventory.
Equipment Financing
If you need cash specifically to purchase equipment for your business, consider equipment financing. The loan is secured by the asset you purchase, which can make your payments more affordable. Plus, you could qualify to finance up to 100% of the purchase price in order to preserve your business’s cash.
Another advantage of equipment financing is that your Florida business doesn’t need to use heavy machinery in order to qualify. Other eligible purchases include office furniture, vehicles, and computers.
SBA Loans
Small Business Administration loans are guaranteed by the federal government but executed by private lenders. There are three primary types of SBA loans:
7(a) loans: Florida business owners can use this type of financing to pay for real estate, working capital, debt refinancing, machinery and equipment, furniture, ownership changes, and more. An SBA loan calculator gives you a sense of total costs and monthly payments.
504 loans: 504 loans finance projects that foster business growth and job creation. The funds can be used for major fixed assets.
Microloans: An SBA microloan provides up to $50,000 in funding for small businesses.
It’s helpful to know how you’re going to use the funds so you can estimate your ideal loan amount. Many business owners apply for financing to be used towards upfront costs, expansion, cash flow, or large purchases like property, equipment, and inventory.
Lenders typically look at your personal credit score for your business loan application, as well as your business credit score. Banks usually require a minimum personal score of 680 or above, while online lenders may have more flexible requirements.
Business credit scores range from 1 to 100, with 70 considered the threshold for a “good” score. Having a below-average score doesn’t necessarily mean you can’t get approved for a Florida business loan, but you may have to pay a higher interest rate and secure the loan with collateral.
Gather Your Key Documents
In addition to filling out the lender’s application, you’ll also need to submit supporting documentation. Here are common documents that may be requested when you apply for any type of business loan:
• Credit report
• Income statement
• Bank statements
• Budget
• Income tax returns (both business and personal)
• Business plan
• Collateral valuation and supporting documents (such as titles, deeds, or invoices)
Compare Lenders and Loan Offers
Lenders evaluate business loan applications differently, so it’s worth checking with a few different options to compare your offers. You might qualify for different financing structures and even different loan terms (including interest rates) with various lenders.
Submit Your Application and Await Approval
Once your application is complete and you’ve gathered the required documentation, you’re ready to submit your package to the lender. From there, you’ll need to wait to find out whether you’ve been approved. Online lenders tend to offer quick decisions, while banks and other SBA lenders have a longer wait time.
Grow Your Business the Right Way. Explore small business funding options in one place with no impact to your credit score.*
Explore these organizations for additional Florida business loans and help in growing your company.
Additional Business Resources in Florida
Florida’s Small Business Development Center network helps businesses at all stages. Search to find one of nine regional offices closest to you. All locations offer three core service areas:
• Training: Access hundreds of live trainings each year, covering topics from business basics to management skills.
• Consulting: You can work with a no-cost business consultant to help you grow your business in areas like strategic planning, financial analysis, marketing, capital access, government contracting, and more.
• Research: Get research your business may not otherwise be able to afford. Then you can make better informed decisions with customized reports related to your industry and geography.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
The Takeaway
Fueling your company with a Florida business loan can help you launch and expand more quickly than simply bootstrapping each step of the way. Explore SoFi’s small business loans to compare loan offers from multiple lenders.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
With one simple search, see if you qualify and explore quotes for your business.
You can get a small business loan in Florida by applying with local financial institutions and online lenders, or by searching opportunities from the Florida Department of Commerce’s Small Business Innovation program.
Can I get a startup business loan in Florida with no money?
Getting a startup business loan can be tricky because many lenders like to see a minimum time in business and revenue. Applying through a small business loan marketplace can save you time by narrowing down lenders that are comfortable working with startups.
How hard is it to get a small business loan in Florida?
Florida has a business-friendly environment, but just as in any other state, you’ll need to submit a strong business loan application to get approved. Expect to have lenders evaluate your credit scores and financial documentation for both your personal and business backgrounds.
What is the easiest type of business loan to get approved for?
It’s usually easier to get approved with secured business financing than unsecured. That’s because the lender can repossess the collateral if the loan goes into default.
What credit score do I need for a small business loan?
The typical minimum for a small business loan is a 680 for personal credit and a 70 for business credit.
What can I use a small business loan for?
Small business loans can be used for working capital, debt consolidation, inventory purchases, real estate, equipment, and more.
Are there any small business grants available in Florida?
Yes, you can research several online grant aggregators to search for online small business grants by locations, including those available in Florida.
SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SoFi receives compensation in the event you obtain a loan, financial product, or service through SoFi’s marketplace. This webpage is owned and operated by SoFi Lending Corp., licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. ((www.nmlsconsumeraccess.org)). This page is NOT operated by SoFi Bank. Loans, financial products, and services may not be available in all states. All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown through SoFi’s marketplace are from providers and are estimates based upon the limited information you provided and are for informational purposes only. All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the provider you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the providers and not by SoFi Lending Corp. Please review each provider’s Terms and Conditions for additional details.
*Small Business Loans: Reference to “same day funding” or “funding within 24 hours” describes a general capability of many lenders you can reach through SoFi’s marketplace. Funding or funding timing is not guaranteed. Your experience with any lender will vary based on requirements of the lender and the loan you apply for. To determine the timing of funds availability, you must inquire directly with any lender. In addition, your access to any funds from a loan may be dependent on your bank’s ability to clear a transfer and make funds available.
†Credit score impact: To check the options, terms, and/or rates you may qualify for, SoFi and/or its network providers will conduct a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the provider(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit. Rates may not be available from all providers.
Business loans don’t have to be complicated. Get clear answers on applications, learn what providers really look for, and understand popular loan options.
