Your Guide for Getting Small Business Loans
Starting a small business can be expensive, and without upfront capital, very difficult. After all, starting a business requires a lot of time and effort, so if you’re trying to fund your business and work a day job at the same time, you might find yourself running ragged, with is no good for your own health or the health of your future business. To help small business owners out, many lenders offer small business loans with great rates and terms. However, in order to find one of those great loans, you need to do your homework.
First, you need to decide what type of loan is right for you. There are several types of business loans available to entrepreneurs, but not all are right for you. Because most lenders will not loan to a business without at least one year of cash flow, you may have to rely on credit cards, friends, crowd funding and even personal loans. While none of these options is ideal, if you choose the best method with the least amount of interest, it can serve to successfully get your business off the ground.
If you do have a year or more of revenue in your business’s names, you have more options for obtaining small business loans. For instance, you can go the traditional route and use a bank or other financial institution. This might be the best option for you if you have a good amount of collateral, good credit and you don’t need fast cash.
If you still cannot get a traditional loan because your company is too small, a microlender might be a viable option. Microlenders are non-profits that lend small amounts to businesses on a short-term basis. Typically, the interest rates on these types of loans are higher than that of traditional loans, so it’s not recommended to use a microlender unless you have to. Moreover, if you don’t anticipate being able to repay the loan for an extended period of time, reconsider going this route.
Online lenders should be your last resort. Though they offer large loans, they are generally for people who lack good credit and collateral; because of this, the APRs on these loans can soar well above the national average. The approval rate on online loans is high, however, and you can generally receive your money in as little as 24 hours (all the better for starting your business as soon as you want).
Small business loans are not easy to come by, and not all offer the best rates, but if you have a viable business plan and envision future success as an entrepreneur, the above options are worth looking into.