Getting a business loan is something that all companies will need to consider during the course of their operations. Whether you need start up money, money to expand, or even an amount that is enough to keep your head above water. Whatever the need, you must approach the process with care. If you rush headfirst into a commitment on a loan you may soon see that it will bite you in the behind before it is paid off.
One of the most important things that you can do when getting a loan is to compare. Shop around. Take advantage of online platforms such as iSelect that do all the leg work for you. They will take your information, evaluate your needs and information, and match you with any of their partners that you could have a chance of acceptance. Once you have your choices in hand it is time to apply for a loan, business loans have many advantages for entrepreneurs, but there are a few factors that you need to consider before committing to any loans.
- How much do you need-This is probably the most crucial factor of the process. You need to know how much money you need, and how much money you can afford to put into it. So as an example, if you need 50k to complete an addition, and you have 10k that you can spent on it, you will need a loan for 40k to cover the rest. You also need to ask yourself “what will they be given out for?”
- How much will the cover-This is also an especially important aspect of the loan process. We will go off the example above so let us say you need 40k from the lender. They will all have levels and percentages that they will throw at you, but the bottom line is that if they will not cover the rest of what is needed for the project, move on to the next option. Eventually you will find an online lender that will take your contract. It may be a little higher interest than you want, but once you get the loan and pay some of it off you can refinance for a better deal.
- What do they need to carry the contract-More than likely you will have to put some type of collateral down for the lender to hold the loan. This collateral can be anything that is worth money. Something that has as much or more value that what the loan is that you are trying to get. For instance, once again using the example above, if you need 40k and you have business equipment that is valued at 60k the lender will probably accept it as the collateral. If they will not move on to the next choice.
- What are the terms-The terms of the loan will need to be gone over. Not just browsed through but read through from front to back. You need to know how flexible they are in their contracts, how much interest they will be charging, how much per month they will need paid monthly, and so on. You should know what the terms of a contract mean by now. Just make sure that their terms match your needs and are within your abilities to pay back.
- What do they need from you-If you have dealt with loan officers before you know that they want all kinds of paperwork, for your business and for you. You need to check with the lenders that you are considering and see what they need from you. Make sure it is things that you can get and get in a timely fashion. If something comes up that you simply cannot get quickly, ask them to be lenient. If not, move on.
Those are the main five things that you need to consider before committing to a contract. You probably have noticed that throughout this article it has been stated that if something is not to your liking that you need to move on to the next one. Remember that you are the one in control, and if one company will not work with you it is your right to move on to their competitor. Never allow yourself to get stuck in a bad loan just because you are desperate for money.