(Last Updated On: October 31, 2017)

I want to start my own business. What kind of small business loans are available to me, and how do I apply? These are some classic questions!

Disclaimer of liability
Starting a new business is never easy, and unless you are wealthy, you will need some money before you start trading. If you are not fortunate enough to borrow your family members or friends to start your business, you will need to borrow money from a bank or other lender.

You can finance your business only by using your personal credit card, at least to some degree. Credit cards, personal loans, and lines of credit on real estate are all different ways to start a new business. However, depending on your credit history, your personal income, and assets, the chances of getting a personal credit are limited. In addition, if your business were to fail, you would be risking the loss of substantial personal assets, such as your home, if you use those assets to secure a loan.

The other option to finance the start up of a business is to look for a commercial credit, or a quick pay day loan for a business, which differs greatly from a personal credit. Short-term business loans, which typically have to be repaid within a year, are a common source of initial funds as you begin to have your business established, or when you need cash flow relatively quickly. You can also apply for medium-term loans, which usually range from one to three years, and long-term loans, which are reserved for significant capital investments and improvements. A long-term loan, unlike short-term loans, generally must be covered through partial monthly or quarterly payments. Finally, you can also apply for a line of credit, which gives you the freedom to borrow only when you need it, up to a certain limit, without having to re-apply for a loan.

When you apply for a commercial loan, you must provide the bank or lender with more information than you would have to give if you simply applied for a personal loan. In particular, you need to spend some time developing a very specific business plan, showing the reason you need the loan, how much money you will need, how much time you will need to repay it, and how you will repay it. In your plan, you must describe your business, how you visualize it working, and your qualifications to start such a business. You should also formulate a detailed budget and provide any documentation on the assets on which it is based as well as the capital you have already devoted to your business, plus a financial statement of your personal situation. Typically, the bank or lender will require you to personally guarantee the loan, and may even require you to obtain a guarantee or government guarantee.

Once you have applied for a commercial credit, the bank and / or lender have 30 days within which to decide on your application. However, it is often harder to get credit than you might think. Since many small businesses have failed lately, banks and / or lenders can act cautiously before extending a commercial credit. However, if you are denied a commercial credit, you should not be discouraged; the bank or lender must give you the specific reason why they were denied it, so that maybe you can redesign your business plan and later re-apply for the loan.

From the founder of BibleWayMag comes a powerful devotional and motivational book An Empowered Life Wake up each morning with an inspirational and motivational word to take you higher Get Your Copy Now or website my personal website driventosuccess.co for more details and other books.

LEAVE A REPLY