October 1, 2020 By SmartBiz Team

As the number of bookkeeping services continues to grow, it’s vital to stay competitive. If you have a bookkeeping business, strategies for success include marketing, purchasing new or upgraded equipment, hiring, and more. Low-cost funding can help you shore up operations and reach your goals.

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Financial options for bookkeeping service businesses

Finding a business loan for your business with the right interest rate can be challenging. From SBA loans to bank term loans, we’ll break down the information you need to know so you can make the best choice. Some small business loans are fast, others take more time, some are costly, and others offer low-cost funds.

Financing options during the COVID-19 coronavirus pandemic

In March 2020, the CARES Act was signed and includes a new SBA 7(a) program called the Paycheck Protection Program (PPP). The purpose of these loans is to help small businesses keep workers employed amid the coronavirus pandemic and economic downturn. The funding from the first round of PPP has been depleted but there’s hope for additional help.

As of September 2020, there is legislation being debated in Congress about a 2nd round of PPP funding for business owners affected by COVID. The SmartBiz Small Business Blog will continue to track the emergency funds available to small businesses and provide application and forgiveness information.

For helpful information for small business owners about the program, visit our information center here: Small Business Loans & Resources in Times of Coronavirus (COVID-19).

The SBA 7(a) Loan Program

If you qualify, low-cost SBA 7(a) loan can be your best option. SBA loans have low rates, long terms, and very low payments to fuel stability, growth, and savings.

An SBA 7(a) loan can be used for a variety of purposes including:

Working Capital – Working capital is the common measure of a business’ overall health. Calculating working capital is pretty simple: deduct current liabilities from current assets. If your current assets do not exceed your current liabilities, your business needs additional working capital.

Business owners should make sure to have enough working capital in the bank to meet financial obligations and cover day-to-day expenses. Proceeds from an SBA working capital loan can be used for business building initiatives like hiring and purchasing upgraded equipment.

Debt Consolidation Loans – Refinance merchant cash advances, short-term business loans, high interest business loans, daily or weekly payment loans, or business credit cards.

Commercial Real Estate – Buy an owner-occupied commercial space for your place of business. Commercial real estate SBA loans can also be used to refinance an existing commercial real estate mortgage.

Advantages of SBA 7(a) loans for a bookkeeping business

SBA 7(a) loans are known as the “gold standard” in small business funding because of their low rates and 10-year terms. (Commercial real estate SBA loans have 25-year terms) Other advantages include:

  • Very low monthly payments
  • Available for many uses
  • Helps build business credit
  • No prepayment penalty
  • Available nationwide

Requirements to apply for an SBA 7(a) loan for a bookkeeping business

Each lenders has unique eligibility requirements for an SBA loan. For example, some lenders may require a business plan while others do not. (SmartBiz Loans does not require a business plan). General requirements for an SBA loan will vary from lender-to-lender but here are guidelines.

  • Time in business must be above 2 years
  • Business owner’s personal credit score must be above 650
  • The business must be U.S. based and owned by US citizen or lawful permanent resident who is at least 21-years old
  • No outstanding tax liens
  • No bankruptcies or foreclosures in the past 3 years
  • No recent charge-offs or settlements
  • Current on government-related loans

How to apply for an SBA 7(a) loan for a bookkeeping business

Step 1: Determine if you meet the basic requirements for an SBA loan (listed above). For more information, visit the SmartBiz Small Business Blog: Key SBA Loan Requirements for Existing Business.

Step 2: Gather paperwork. The more organized you are, the swifter the application process will move. For a list of documents required for an SBA loan, visit the SmartBiz Blog: How to Get an SBA Loan: Documents You Need. It’s a great idea to work with your accountant, bookkeeper, or another financial professional when putting together the required paperwork.

Step 3: Choose a lender. Here are items to consider when you’re shopping around:


Lenders should disclose an annualized interest rate or APR in an easy-to-understand manner.

No hidden fees

When researching loans, don't forget about additional packaging or other types of fees. Lenders should clearly state the fees that will be due before a loan is funded and during the life of a loan.

Plain-English terms

If borrowers don’t completely understand the fine print, they can get trapped in a high-cost loan with difficult to make payments. Some lenders even require daily payments. Information that should be easy-to-understand includes the total loan amount, the payment amount and frequency, collateral requirements and any prepayment penalties. A quick and easy glossary of small business lending terms can be found here.


Is there a quick and easy way to reach your lender? If you’re working with an online lender, can you pick up the phone for any questions or concerns? When you call your lender, you should have a dedicated representative that is familiar with your business and your application. An unresponsive lender could be a red flag.

Good reviews from real customers

These days, it’s simple to check out a lender online. There are a number of review platforms you can visit to get the pros or cons of their customer service. Try TrustPilot, Google Reviews, or ConsumerAffairs.

The SBA 504 loan program

This program was created to give small businesses low cost funds for expansion or modernization. Typically, up to 50% of project costs are funded by a lender backed by the SBA. CDCs (Community Development Corporations) usually fund up to 40% of the project cost. The final 10% is a cash down payment expected to come from the small business owner. A 504 SBA loan might be a good fit for small business owners interested in purchasing a commercial real estate property and if their unique business circumstances fit with the public policy goals of your local CDC.

The SBA microloan program

The Microloan Program is for very small businesses, including start-ups and provides loans of up to $50,000. Requirements to qualify for a microloan can vary depending on the lender. Proceeds from an SBA Microloan can be used for most business expenses but not for paying down debt or real estate purchases.

Non-SBA loans and other funding options

There are plenty of non-SBA loan options available although they may have higher rates, shorter terms, and larger payments.

Bank term loans

Bank Term loans are a good fit if you need funds quickly and your financial profile might not be as strong as needed for an SBA loan. Uses vary by lender but generally funds can be used for working capital, debt refinance, and new equipment purchases. Check with the lender regarding loan amounts available, repayment terms, rates, and pre-payment penalties.

Business lines of credit

A business line of credit allows you to borrow funds up to a limit based on your credit, typically smaller than a term loan. You only pay interest on the amount you use, and you can continue borrowing as necessary until you reach the set maximum. These loans are usually unsecured, meaning that you won’t have to provide collateral to qualify. For in-depth information, read this post from the SmartBiz Blog: Small Business Lines of Credit Pros and Cons.

Business credit cards are revolving lines of credit. The main distinction is that they don’t terminate once the predetermined limit is reached. They work like personal credit cards, with varying spending rewards and offers depending on the lender. Learn more here: 5 Business Credit Card Myths.

Merchant cash advances

A merchant cash advance (MCA) is most often used by small businesses that accept credit and debit card sales. You receive a specific sum in advance that is repaid either by a percent deduction from daily transactions or through daily or weekly payments. Keep in mind that MCAs often lead to extremely high annual percentage rates. For more info, read What You Need to Know About an MCA.