So you have some great ideas on how to grow your small business, but you don’t quite have the funds to fully realise them just yet. That is where getting a small business loan comes into it. But before you rush ahead with some form of business financing you might want to consider these ten things that could help you decide if a secured and unsecured business loan is right for you…
Get The Right Type of Loan
Finding the right type of loan could make a difference to the amount on offer to you. With most unsecured small business loans going up to $500K and secured loans going up to double that amount and beyond depending on the value of assets your company has.
Get a Few Quotes
Don’t just click on the first ad for small business loans that you see, shop around you will soon discover variations in the amount you have to pay each month, the rate of interest charged and even in the amount a company is willing to lend you in the first place.
Local is Not Always Best
You might be thinking about going with a small local business loan broker, but that is not always the best choice. Try going to the bigger name banks and lenders before going to a small one. It’s all well and good supporting local business, but not when it comes to businesses access finance.
This is something most small businesses get caught out on. Sometimes there will be hidden fees and costs associated with a small business loan. Some firms even charge a larger final fee rather than set payment amounts, so do always read the small print.
Do You Really Need it?
You wouldn’t be thinking about taking out a small business loan if you hadn’t thought it through properly, but do you still really need it? If it is just a small business loan why not hold off a few months until you have enough capital to do what you need to do! You might suddenly realise you can just hold off a few weeks until some bigger invoices are paid and just carry on with your plans anyway, without occurring any interest costs.
Is Now The Right Time?
Whenever you are thinking of taking out a business loan do try to semi-predict the future, especially if your growth is weather dependant. Do you really want a small loan to open up another ice-cream shop just when it is coming into the Winter months? You don’t have to become clairvoyant to look a few months ahead.
Always Check out Late Payment Fees and Protocole
You wouldn’t be taking out a small business loan if you didn’t have every confidence that you could pay it back, but sometimes things happen that might mean a late repayment or even worse a freeze on your financial assets. A loan broker might even be able to shut down your business if you have secured machinery or something else of value against the loan. So do be careful about what happens should you not pay and don’t ever be afraid to answer those kinds of questions as it won’t matter whether or not you will get the loan in the first place.
Who is Lending You The Money?
If you goto shop ‘A’ or website ‘B’ it is only A or B that is lending you the money right? Well…no. If you read the small print you might soon discover that a big name bank is the one lending you the money. Many sites and small load shops act as brokers for you rather than lending you the money themselves.
What is my Credit History?
Here is something many small business owners don’t take into consideration and that is how their own personal credit history might affect getting a loan for the business. Sure, your company’s credit history is of course taken into account, but the company owner is also seen as a risk and could affect it.
Small Loans Now = Big Loans Later
By getting smaller loans in the earlier days of your business and paying them back will mean you will have a much better credit rating and in the future. I will also increase the amount you can borrow which could open doors to new future possibilities.
Have you ever applied for a small business loan, or do you have any questions about them? If you do why not let us know by leaving a comment below.