According to a July 2020 report conducted by Business Wire, the U.S. internet security consulting market was valued at $2.6 billion the year prior. This report attributed the industry’s growth to the ever-increasing number of annual cyber attacks, a trend expected to continue in 2021. Internet use rates have increased given the local and state stay-at-home orders that have accompanied the COVID-19 pandemic, including record high numbers of people working from home. This directly corresponds to a growing need for increased internet security.
However, other reports suggest that the COVID-19 pandemic could negatively affect the internet security consulting landscape. One report the research firm IBISWorld predicts a 2.9% industry revenue drop during 2020, for reasons such as widespread company bankruptcies curtailing business demands for internet security consulting. This same report also found a silver lining: Demand from companies unlikely to fail could remain steady, as existing and growing companies typically need larger and more secure infrastructures.
Whether you’re expecting to grow your internet security consultancy given the built-in demand or struggling to make ends meet, you can apply for many types of low-cost small business funding. Below, learn all about the many types of small business loans for internet security consultants.
Funding challenges and opportunities for internet security consultants
The funding obstacles you might face as an internet security consultant likely do not differ much from those prevalent in other industries. For example, lenders aware that the internet security consulting industry might soon hit tough times may hesitate to approve your loans since they perceive your operations as high-risk. Additionally, if your company is young, lenders may hesitate to fund you since freshly minted businesses may be more likely to fail than long-established companies.
That said, pursuing small business loans for internet security consultants can be easier than obtaining funding for other industries. Many internet security consultants operate remotely from home offices or from a shared office space, meaning they have less overhead than their larger counterparts. This means fewer monthly payments for which to budget and, in some lenders’ eyes, more room to afford loan repayments. These lenders likely fall into the funding categories detailed below.
Financial options for internet security consultants
As an internet security consultant, you have the option of choosing between SBA loans and non-government funding. No two small business loans for internet security consultants will have the same approval rates and periods, but the guidelines below paint a reasonable picture of what to expect.
The SBA 7(a) loan program
Many small business finance experts consider low-cost SBA 7(a) loans the best funding options. These loans’ low rates, long terms, and low monthly payments make them ideal for small businesses. You can use SBA 7(a) loans to:
- Acquire Working Capital – Working capital is the difference between your current assets and your current liabilities. It is also the amount of cash you have on hand for business purposes. Many financial experts view it as the business metric most closely related to your internet security consultancy’s health.
If you determine that your working capital is negative, you should strive to make it positive again. You can do so by hiring new employees or buying new equipment, both purposes for which SBA 7(a) loans are valid. - Consolidate Your Debts – Through SBA 7(a) debt consolidation loans, you can refinance your ongoing merchant cash advances, high-interest business loans, daily or weekly payment loans, or short-term business loans.
- Buy Commercial Real Estate – If you plan to open a second location for your internet security consultancy, you can put your SBA 7(a) loan toward launch expenses such as buying new owner-occupied commercial real estate. Alternatively, you can use SBA 7(a) commercial real estate loans to refinance your current commercial real estate mortgages.
Advantages of SBA 7(a) loans for internet security consultants
Most lending experts agree that SBA 7(a) loans are the “gold standard.” That’s because small businesses such as internet security consultancies can repay them in affordable monthly installments with low rates. Other benefits include:
- Wide use of funds
- Lack of prepayment penalties
- 10-year terms (25 years for commercial real estate loans)
- Availability in all 50 states
Requirements for internet security consultants to apply for SBA 7(a) loans
If you and your internet security consultancy meet all the following qualifications, you can most likely apply for SBA 7(a) loans:
- You must be at least 21 years old
- Your personal credit score must be above 650
- Your internet security consultancy must be based in the U.S.
- You must be a U.S. citizen or lawful permanent resident
- Your consultancy must have no outstanding charge-offs, recent settlements, or tax liens
- Your consultancy must be at least two years old
- You must not have foreclosures or bankruptcies in the past three years
- You and your company must be on-schedule with all government-related loan repayments
Some lenders may have additional requirements that other lenders don’t. For example, although SmartBiz Loans does not ask applicants to present a business plan, other lenders have this requirement.
How to apply for an SBA 7(a) loan for internet security consultants
Step 1: Confirm that your internet security consultancy meets all the aforementioned SBA 7(a) loan requirements. Learn all about SBA 7(a) loan requirements via the SmartBiz Loans page SBA Loan Requirements for Existing Businesses.
Step 2: Gather all your required paperwork, which could be quite a lot. Ask for assistance from your bookkeeper, accountant, or other financial experts if needed. Consult the SmartBiz Loans Guide to SBA Loans for a detailed guide to your paperwork requirements.
Step 3: Decide which lender you’ll borrow from based on their:
Availability
Even the most favorable loan terms aren’t a good reason to choose a lender that’s impossible to reach. Make sure that your lender links you with a representative whom you can regularly reach via phone or email. This representative should also know your consultancy, the internet security industry, and your application in and out.
Reviews
Find your lender on TrustPilot, Consumer Affairs, and Google. Read the reviews that customers have left there to determine whether the prospective lender in question is appropriate for your consultancy. Check that the reviews you’re reading were left by real customers so you can be sure you’re getting an accurate picture of your lender.
Transparency
Make sure that your interest rates and APRs are clearly explained in your loan terms. If they aren’t, it’s possible that your lender is attempting to hide key aspects of your loan terms. With this lack of transparency can come surprise loan terms that place additional burdens on your internet security consultancy.
Obvious loan terms
On that note, make sure all your loan terms are clear as day. Complicated fine print can hide unfavorable loan costs and payment schedules – instead, you want to clearly see payment amounts and frequency, collateral requirements, a total loan amount, and (if applicable) prepayment penalties. If you ask for clarification and get an unsatisfactory response, find a different lender.
Fees
The two primary payments accompanying your loan should be interest and repayment fees. Excessive additional fees can be a red flag, as can any loans with fees not due during your loan’s lifetime and before your loan’s funding.
The SBA 504 loan program
If you need low-cost funding for expansion or modernization, consider applying to the SBA 504 loan program. You can use your SBA 504 loan proceeds to upgrade your equipment, open new locations, or recruit new employees.
SBA 504 loans also come in handy if your internet security consultancy falls in line with the public policy goals of your local community development corporation (CDC). In that case, your SBA 504 loan and CDC together may cover as much as 90% of your expansion or modernization costs (at most 50% from your SBA 504 loan and 40% from your CDC). You’ll be responsible for the rest.
The SBA microloan program
If your internet security consultancy qualifies as a very small business (a.k.a. microbusiness), you may be able to apply for the SBA Microloan Program. If you’re approved, you may receive a microloan of up to $50,000. These loans can go toward all business needs except debt repayment and commercial real estate purchases.
Non-SBA loans and other funding options
Although SBA loans are likely your best bet, not all internet security consultants qualify for them – and in that case, you still have other options. These routes often have higher rates, shorter terms, and larger payments than SBA loans. They include:
Bank term loans
If you need funding as quickly as with SBA loans but don’t qualify, you might find that bank term loans suit your purposes. You can use bank term loans to obtain working capital or refinance your debts. As you seek them, ask lenders about your repayment terms, rates, possible prepayment penalties, and potential loan amounts.
Merchant cash advances
If your internet security consultancy accepts credit or debit card payments, you can obtain funding through merchant cash advances (MCAs). Through MCAs, you can borrow money from a card provider and repay your loan by reserving a small percentage of all individual transactions for your card company. You can also repay your loan in traditional monthly installments.
The convenience of MCAs can streamline your loan repayments, but MCAs may ultimately cost more due to their notoriously high APRs. Read more about MCAs via the SmartBiz Loans blog What You Need to Know About an MCA.
Business lines of credit
Through business lines of credit, you get access to a credit line of a maximum amount proportional to your credit score (though likely less than what you’d get from a bank term loan). You don’t have to use all the money you can access through a business line of credit, and you’ll only pay interest on the money you do use.
You can use the funds from your business line of credit as frequently or infrequently as you desire until you reach your maximum. Since you likely won’t have to put down collateral to obtain business lines of credit, you may find them lower-risk as well. Learn more via the SmartBiz Loans blog Small Business Lines of Credit Pros and Cons.
Like business credit cards, business lines of credit are revolving lines of credit. However, you can repay your business credit cards and use them again, whereas business lines of credit are one-time opportunities. You may also earn spending rewards from some business credit cards that business lines of credit never include. Find out more via the SmartBiz Loans blog Finding the Right Credit Card for Your Small Business.
Why Choose SmartBiz Loans?
Need funding to rebuild your business? Don’t waste time going from bank-to-bank filling out multiple applications. SmartBiz helps you find the best financing for your unique needs whether that’s an SBA loan, Bank Term loan, or other financing. About 90% of qualified applications we refer to banks are funded and our financial professionals are on hand to answer your questions. Discover if you’re pre-qualified here without impacting your credit scores** and read the SmartBiz 5-star customer service reviews on TrustPilot.
