It’s a great feeling, isn’t it?
You’re finally ready to branch out on your own. You’ve been planning your new business launch for months—maybe years. What started as a simple idea and a couple-hours-a-week side hustle has blossomed into something that is almost self-sustaining.
But you need capital to launch in earnest. You need a loan.
It’s important to know, however, that not all loans are created equal. With so many lenders, loan companies, and banks out there, it’s hard to determine which one offers the best loan terms and rates.
Before choosing a loan, take 15-20 minutes and answer the following questions. These will help you determine what lender and loan is right for you.
Hold on to your answers and review the information below. Align your needs with the right loans, then contact the appropriate lender for how best to proceed.
There are three primary categories of lenders: the Small Business Administration, banks, and alternative lenders. Here is a quick overview:
This lender offers a few loan programs that are meant to meet the financing demands of most business types. That means that there are a number of SBA loans for businesses to pick from.
It’s important to note that the government doesn’t directly lend money. Instead, the SBA creates a set of lending guidelines for loan-seekers; these are used by partner entities—such as banks, micro-finance institutions, and community development organizations—to determine whether or not applicants receive loan money.
Pros: Government backing eliminates plenty of risks for the lenders. The SBA loan terms also tend to be better than those of many other lenders.
Cons: SBA loans often include extra fees; there’s a bunch of additional paperwork; the approval process in lengthy.
Outside of serving as SBA lenders, banks also act as independent lenders of conventional business loans. In their capacity as private businesses, however, they have no governmental guarantee of repayment. And while you might think that would make their loan terms more rigid, they aren’t. But that’s balanced by the “cons” outlined below.
Pros: The conventional bank loans involve low-interest rates. Plus, the approval process is somewhat faster since the federal agencies aren’t involved.
Cons: Those loans usually include short repayment times as well as (occasionally) balloon payments. In addition, it is often hard to get approved if you have a bad credit score.
Alternative lenders have the least stringent approval requirements, which makes them a great choice for small businesses with a poor financial history and low credit score. They offer services and applications online, make decisions on approvals quickly (typically in a couple of hours), and provide loans usually within a week.
If you need funding quickly, consider choosing direct alternative lenders as We Help Businesess.
Pros: Alternative lenders do not care about your credit history; the loan can be approved almost instantly; there are only a few limitations on what the loan can be used for.
Cons: The interest rates are high compared to those offered by banks or the SBA, so repayment can be a challenge. Contant them about the best deals available.
Ok, so you’ve mapped on your answers to the questions above and considered them alongside the primary lender types.
Now you need to know what loans each one offers so you can take the next steps in securing funding.
Here’s a deeper dive into the loans available:
Now that you have familiarized yourself with all the available options, you should be able to decide which type of lender and loan are most favorable for you. Just be sure you use the money wisely, and pay it back as quickly as you can.
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