Getting a business loan should not be a task for somebody. When an individual or business make up their mind to apply for business loans one of the most basic steps is understanding what are the different business loans available and is your business qualified to get a loan under any of the categories.
Let us discuss some of the most effective steps in which you can get a business loan:
1. Deciding the correct type of loan you need to fund your business:
The first and foremost step in order to getting a loan is to decide what type of loan is your business qualified for. Further deciding which is the best-suited business loan for you depends upon what is it that an individual or the company aims at accomplishing. Some of the accomplishments that you might want to fund are:
- In case the loan is to fund a big project or a high-valued purchase: in the case of term loans, an individual or company borrows a sum and pays back the sum with some level of interest. Some of the bigger lenders now offer loans for specific products or services to a company depending upon its growing needs and requirements.
- Funds for carrying out day-to-day expenses: funds that may be required for carrying out daily work, unexpected repairs, salaries, etc can also be covered under a business loan.
- Funding a start-up: for an entrepreneur, one of the easiest ways of getting a loan is in form of either a personal loan or a Business credit card. Qualifying for a traditional business loan may be difficult since an individual entrepreneur may not have been in the business for a long period of time and therefore would not qualify for the term loan.
2. Do you qualify for the business loan:
a bank, online lender and micro lenders or some of the sources from which you can get a business loan. Which type of lender would suit your requirement depends upon:
- Your credit score: For businesses with a credit score of more than 690 chances of getting lower interest rates from banks, for your business loan are higher. In case your credit scores are not as high it would be better to find either a micro lender or an online lender.
- In order to qualify to get a business loan from the bank you must be doing business for at least a tenure of two years and in terms of getting a loan from an online lender, you must be in business for at least a year. Apart from going to online lenders and micro lenders one of the other options could be applying for quick business loans. A quick business loan is an easy alternative for businesses that either has a bad credit line score or who are in need of a quick and easy funding option.
- Your business must be generating some amount of minimum revenue in order to get a loan from the bank and in case the business revenue is not high one must consider going for business credit card options.
3. Can you afford repayments:
It is extremely important to understand how you would be repaying for the applied loans. One must be having at least 1.25 times income on your expenses.
4. A business loan could either be secured or unsecured:
A secure business loan would require an entrepreneur or company to keep a collateral as security, in case you are unable to pay the loan.
Once you have read all the requirements and qualify for a business loan it’s time to practically apply for it.