Whether it is for covering expenses, payrolls of employees, utilities, or taking on a new project, running a small business require a non-stop cash stream. Large businesses with strong cash reserves can tackle this issue easily, but it still remains an obstacle for small businesses. Good news is small business loans can help you to get out of this mess. In this article, we are going to jot down how to use a small business loan effectively and what are the factors to consider before applying for small business loans.
Starting a New Venture
Most startups use their personal savings to run their businesses. However, most of the times personal savings are not enough to pay for other expenses. And for that reason, you should opt for a small business loan to cover your expenses.
Non-stop Cash Flow
There are many seasonal small businesses in the US that need funding to cover up their inventory and other assets to complete an order. Sometimes the cash in hand is not enough to buy inventory and therefore owners who cannot cover their cash flow needs from their personal or business savings may require funding. A small business loan is an excellent funding solution to cover cash flow problems.
Business expansion requires a large amount of cash and small business loans can help business owners looking for expansion. Whether you are looking to expand your premises, expanding operations as well as want to hire more staff, small business loans can help. Small business loans not only providing cash but can help business owners to achieve faster growth. Another good thing about this expansion funding is that you can refinance your existing debts as well.
Refinance Existing Debt
A business experiencing debt problem can refinance to lower the interest rate or reduce the monthly payments. Refinancing will strengthen their financial position and helping them in the growth of their business with more profitability. Most of the times, business owners take out a loan and then continue making their repayments until the full amount is paid off, however refinancing existing debts can help you save on interest rates with better terms.
Things to Consider for a Loan
Here are some factors business owners should consider before applying for a loan:
- The Required Amount
Whether you’re just starting up or are expanding your existing business operations, you need to explain three things to your lender:
- How much amount of cash your business needs?
- How the business will use the loan amount?
- How the business will make repayments on the loan?
- Understand the Borrowing Cost
You need to understand how much borrowing costs you. APR is the most common measure to evaluate borrowing costs. Business owners may find it quite difficult to maintain profitability when the cost of capital is too high.
- Acknowledge the Repayment Terms
Based on the lender’s requirement, small business loans have a variety of repayment terms and plans. Consider the repayment terms and choose one that will not hurt your overall cash flow. Make sure you fully understand the terms and conditions of the small business loan before applying for one.
- Collateral Requirements
Most of the lenders want to know what type of collateral you are setting up to back the loan amount. However, there are also some that don’t require collateral.
- Received Loan
Many businesses experience financing shortfall just because they were approved for a smaller amount of loan than what they actually needed. Therefore, get a hold of your financials before applying.
5 Types of Business Loans for your Dream – Small Business
Someone once said, “Money is just paper, but it affects people like poetry.” The point being, if you are a dedicated individual with a vision but low on cash, the only thing standing between you and your dream is ‘M-O-N-E-Y’. Gone are the days when you have to give up your dream merely because of no funds! Chin up, broaden your shoulders and apply for small business loans. Allow the business loans to act as a bridge, and transition your dreams to reality.
We have a bunch of different types of loans for you to choose from. Get a proper understanding of your business and scan the below-mentioned five types of business loans:
- Small Business Loans
Engaged to your business for at least 6 months and have an annual gross sale of $100,000, and want to have fast access to extra funds? Small Business Loan is what you are waiting for. Due to their mundane and easy to acquire nature, these loans are highly preferred by small businesses.
With no collateral, no fixed payments, and early payoff discounts the only thing standing between you and your blooming business is your sluggishness. Use $5K – $00K for buying inventory for a busy season or surprise your business with a new room or your employees with a new photocopier. If you need to fund the inventory purchase, small business loans can help you.
- Bad Credit Business Loan
Want your position back in the good credit scorebook, apply for Bad Credit Business Loan. This is a ray of hope by Merchant Advisors. Bad credit business loans can help you to boost your sales with no collateral or personal guarantee. Say Goodbye to bad credit and grab a seat with good credit scorers.
- Merchant Cash Advance
Make a file of your bank statement, financial statements, driving license, strategic business plan, business debt schedule, and you are closer to get a working capital. One of the fastest types of a funding program that can provide you the funds in the same day you applied for them. The factoring fee usually ranges from 1.15 to 1.45 and you can pay off Merchant Cash Advance in 8 months to 1 year. With these benefits, who wouldn’t want to treat themselves?
- Unsecured Business Loans
With the grace of unsecured business loans send an application get it approved in less than 24 hours. The ‘no’ collateral requirement policy make the process easier. Time to make all of your dreams come true.
- Business Line of Credit
If you have 500+ credit score, running a business for at least a year and owner of clean bank record, Congratulations for you are eligible for Business lines of credit loan. Gather your balance sheet, driver’s license, credit score, bank statements, and a few other documents and hop on the ship of the business line of credit loan. You can use this business loan to buy new equipment, renovation, cover operating expenses and much more.
The Business Line of Credit further comes in two types:
– A short-term business line of credit
– Long-term lines of credit
Short-term lines of credit are made to cover the short-term financial requirements of small businesses. However, for long-term lines of credit, you need to have a good credit score. With long-term lines of credit, businesses can cover the inventory purchase, cash flow issues, and other operational expenses.
We have assembled a whole list of the small business loans that can help you take your small business to a high. And we have done the homework for you, now apply for a business loan that suits your business and watch it grows.
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