5 Considerations When Taking Out a Business Loan
Operating a small business is a costly endeavor, and it requires a substantial investment to ensure your new business thrives. Fortunately, there are a variety of options available to help you secure the funding you need. When applying for funding, you need to take into account your credit history, the quantity of funds desired, and your preferred interest rate. These considerations will help you determine which funding source is right for your business.
1. Commercial loans- Commercial loans are loans provided through banks and credit companies. Typically, a commercial business loan will enable you to secure large sums of money upfront but with considerable interest rates. Commercial loans are also difficult to qualify for and will rely on your credit history and business profits. If your credit history is poor, or if you’ve yet to establish credit, your application could be denied, or you may be required to pay higher interest rates.
2. Micro-financing companies- A micro-financing company, or micro-lender, is a non-profit organization that offers small business loans. They offer micro-loans that range in quantity from around $5,000 to $35,000. Many non-profits will offer these loans at no interest, providing you a cost-effective alternative to a commercial business loan.
3. Family and friends- Your family and friends know you better than anyone, and they are the most likely to want to see you excel in your occupation. Seeking out friends and relatives as potential investors is a fantastic way to obtain interest-free financing without worrying about your credit score. Be sure to draw up a contract that states your proposed reimbursement timeline. This will give your friends and family more assurance that they’ll be paid back in an efficient manner.
4. Business cash advances- Business cash advances provide an efficient way for small businesses to receive immediate funding. The application process is quick and easy: approval time for a business cash advance can be as little as 48 hours. With this type of funding the lending company places less focus on credit than banks do. Instead, they survey the entirety of your business model and determine your level of risk based on the history of your business’ profits. This allows business owners with poor or nonexistent credit to get the funding they need. Repayment terms for this funding option are simple and hassle-free.
5. Government funding- The Small Business Administration (SBA) is the primary provider of government funding for businesses in the United States. These federally sponsored loans are similar to commercial loans, but they are much easier to qualify for. The mission of the SBA is to make business funding more widely available to everyone as a means of strengthening the economy. To meet this goal, the SBA has fewer qualifications for applicants and credit history isn’t as important as it is with a traditional commercial business loan.
In order to be successful as a business, proper funding is imperative. With the help of friends and family, micro-lenders, commercial loans, government funding, and business cash advances, you can gather the finances needed to flourish as a business and improve your company profits. Apply for a business cash advance today to get the money you need to succeed in your industry.