Are you a start-up that needs financial assistance to get your business off the ground? Perhaps you have an established business but feel that additional funds will help fulfill your expansion plans. Many businesses need extra cash for varying reasons, and business loans are a great way to obtain extra money fairly quickly. If you are considering applying for a business loan, here are 4 things to consider first.
How Much Do You Need To Borrow?
You must correctly calculate the level of borrowing you require as you will need this for the initial application. It is also useful to have precise calculations as given that you will be charged interest on your borrowing, it’s important to only borrow what you need. It might be tempting to borrow more, particularly if you are offered it, but it’s not a wise move. You will be charged interest on the amount you get from the lender, so stick to the facts and figures and keep your borrowing within those parameters.
Be Prepared For The Paperwork
Financial institutions need to know that your businesses’ finances meet their criteria and do not pose any risk in terms of repaying the loan. You will, therefore, have to answer lots of questions and produce information that will be presented alongside your application. Prepare to be asked for your businesses’ financial history, profit and loss accounts and a business plan outlining where you intend the money being used, and your company’s growth projections.
Shop Around
It’s a good idea to shop around for the best rates. Interest rates vary from lender to lender so make sure you get the best deal. Using a broker will make things far quicker and, as they have access to hundreds of lenders, they will try to find you’re the most affordable deals available at the time of application. There are brokers across the U.S, so whether you are enquiring about business loans in Los Angeles, San Diego, or Ohio, you should have no trouble finding someone who can assist. You can also apply online if that is your preference. Before applying, a broker can give you an indication of what the monthly repayments will be based on your chosen term. This will allow you to ascertain whether this will be affordable month to month.
Are There Other Alternatives?
It’s important to remember that, whilst a business loan is a great way to get the cash you need upfront, it does come at a price. You could be paying interest on your borrowing for several years, so take some time to establish if there are any more suitable options. If you have savings, you may be better using those instead, particularly if the savings rates are not higher than the APR of your loan (which is highly unlikely.) If you are a start-up or your business is in its early stages, perhaps crowdfunding would be a better solution, particularly if you don’t want the burden of a loan until you are more established.
