When thinking about starting a business, in addition to a personal business loan, many questions invade the head of the future entrepreneur, among them: “Is it worth getting a loan to start a business ?”, “How and where to get credit to start a business”, “Get a loan to open my business, what are the options in the market?”, “What are the best loans to open a business?”
You’ve noticed that the list of questions is great before opting to make a personal loan for business. Well, a personal loan to open a business is the same as a business loan, but the amount released and the interest rate are based solely on the profile and credit history of the entrepreneur, not the company or business. For this reason, personal loans are the most popular among owners of startups, fitness and new businesses that do not have a very long credit history but, need instant cash.
Research and then Request a personal loan online
Everyone who is accustomed to dumb financial credit knows that the money from a personal loan can be used for any personal or commercial purpose, excluding the specific loans. For example, a retailer may use a personal loan to buy raw materials, products for inventory, or stabilize cash flow as a business grows.
It should be noted that a personal loan is typically limited to a smaller loan amount than a small business loan. For example, Lee offers personal loans of $ 3,000 but offers commercial loans to businesses of up to $ 500,000. Read the Requirements for a personal loan online.
Check your interest rate for the loan
There are on the web all over the credit companies offering a series of quick and personal loan and financing programs, microcredit and working capital with very affordable interest rates. In alternative business loans, there is a great opportunity for those who do not fit more into the requirements of conventional loans because of the size, type of business, credit constraints or time in the market.
Interest rates are variable according to a number of factors; in general, interest rates are applied between 2% and 5% in each operation, but this can change to more than 8% if the borrower has problems with bad credit and restrictions on credit history. Check before your lender, what is the rate applied so as not to have surprises.
Asset-based loans or credit line
These loans to companies or commercial lines of credit are based on whether or not they have a guarantee, these types of financing serve both to buy equipment and machinery, to meet the needs of inventory, purchase of raw material, as well as accounts payable and receivable.
We still have asset-based loans, they are usually attracted to borrowers who do not yet have a financial record strong enough to qualify for traditional credit, so they offer assets and assets to get the credit they need.
It is worth mentioning that you can offer as many assets as you wish, but keep in mind that if you can not repay the loan for any reason, you risk losing this guarantee.
The advance of invoice or anticipation of receivables
In this type of loan, a company sells its outstanding invoices to third parties known as factoring companies, which provide the business money in one or two installments. In this format, your business has immediate cash and is now the factoring company that expects to be paid on customer invoices.
If you choose this option, it is crucial that you understand the total cost of the loan and how it may vary depending on when your customer’s payback. In addition, you can avoid a bad situation through a more careful financial planning and the application of a long-term installment loan or an alternative credit line such as crowdfunding or collective loan when observing a crisis in your cashier.
Card and Debit Advance
Finally, companies can request cash advances to get a fixed amount in exchange for a percentage of their credit card sales or daily or weekly debits.
How to use it: Similar to factoring, this is an option when your business needs cash fast and has retained credit volumes receivable. It should be noted that this is also typically a costly way of getting a loan.
The actual interest for the cash advance can be very high even if you are paying a fixed amount, this option can be considered only if other lower cost options are not available.
It was to realize that it is a personal loan for business or loan for companies, the important thing is to know exactly at what time and what type of credit will be the best solution.