27 Aug How To Get A Business Loan
Getting a business loan might seem like a very juicy offer when you hear about it for the very first time. However, before seeking a loan, there are certain factors to consider so that you do not run into a debt.
Why do you need a business loan?
Determining why you need a loan can help you ensure that your financials go not go overboard at the moment you receive the loan. Businesses owners need loans for various reasons. For example, To serve as a working capital, To launch the brand, To grow, To purchase equipment, To pay-off debt, To pay salaries, etc. Find out the “why” before deciding to take the loan.
How much do you need & How much can you afford to pay back?
It is essential to know the right amount you need and will be able to pay back so you don’t run into debt for the rest of your life. Knowing this helps you calculate what risks you will need to take to ensure you can pay back. Business loan providers often have loan calculators to help you see the exact amount, the period of time for payback, interests generated overtime and so on.
What kind of business loan do you need & Who can provide it?
Especially for small businesses, there are several kinds of loans that might be available for you. For example; Bank Loan, Short Term Loans, Community Loans (e.g associations, friends, etc) etc. Understanding the kinds of loans you need and where to get them helps you plan better.
Do you need documents, collaterals etc?
Some lending platforms offer business owners opportunities to access some amounts of a loan without the need for a collateral. They almost only need relevant documents to prove that you will be able to payback. Loans without collateral are great for small business owners as it will make you more relaxed (don’t get too relaxed though!). Find out if the lending authority you want to approach offers such services before going ahead to apply for a loan! Some documents that you might need are, ID Cards, Balance Sheet, Time In Business, Statement of Account, Tax Returns, Annual Revenue etc. Note: Not all might be needed!
Once all these factors have been considered, you can go ahead to apply for the business loan!
[This article was originally published as a LinkedIn post]