Business Loans
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Business loans help you to start a new venture or upgrade your existing business with all-important cash flow. Several banks, financial institutions and credit unions offer business loans based on a set of requirements. Before applying for a business loan, do a comprehensive market research of various lenders and familiarize yourself with their loan requirements.[br]
Table of Contents
How to get Business Loans
Your credit scores matter a lot in case of securing a business loan. Your credit history determines whether you are eligible for a loan.
Business loans help you to start a new venture or upgrade your existing business with all-important cash flow. Several banks, financial institutions and credit unions offer business loans based on a set of requirements. Before applying for a business loan, do a comprehensive market research of various lenders and familiarize yourself with their loan requirements.[br]
How to get Business Loans
Your credit scores matter a lot in case of securing a business loan. Your credit history determines whether you are eligible for a loan.
· Obtain a copy of your scores and look for discrepancies. In case of a low score, take affirmative action like clearing debts and paying outstanding bills.
· Gather your personal financial statements, pay stubs and W-2 tax forms. If you have an established business, present copies of your tax returns of your venture for the past 2-3 years. Also, make a list of your assets and liabilities.
· Create a business plan to state your goals and objectives, and clearly explain how you plan to run your business. If possible, hire a professional business writer to accomplish this task.
· Use collateral to obtain a secured business loan. The value of your collateral must match with the loan amount. Collaterals can be a vehicle, jewelry, real estate or other valuable personal property.
· Compare loan interest rates of various banks and lending institutions. Since there are varying rates in the market, visit a broker site and compare different rates. Request for free quotes and choose the one that gives you the best deal.
Various Types of Business Loans[br]
Business loans are of different types. Some of the more prominent ones are:
· Secured loans: With a secured loan, your business backs the amount with collateral such as inventory, accounts receivable, etc. If you cannot pay the loan in the specified duration, your lender can take legal action and sell the collateral to recover the loan amount.
· Unsecured loans: In case of unsecured loans¸ the loan amount is not backed by any collateral. The loan however, requires you to have a high credit rating.
· Term loans: Term loans are used for acquisition of a business, working capital, company expansion and loan refinancing. The loans are paid monthly over a stipulated term, based on the lifespan of the assets being purchased. Short term loans are usually borrowed for a duration of one year, for seasonal purposes like purchasing supplies and raw material. The amount typically is $100,000 or less.
· Equipment financing loan: When you get an equipment loan, the equipment you buy serves as the collateral. If the amount is not paid within the terms, the equipment is given back.
