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Business loan options

manatdesk19160745.jpgBusiness loan options range based on your credit, the amount of money you need to borrow, and the terms of the loan. Depending upon the age of your business and the lender you have chosen to work with, it can be easy to acquire the money or it can become a bit of a challenge. Here are some things you need to know about business loan options so you can find one that will work for your business.

Know your credit
Despite how much you may try to avoid it, lenders are going to check your personal credit rating. They need to see how you have been able to manage your personal debt as it will reflect on how you will manage your business debt. If you have a high debt to income ratio, your chances of securing financing for your business will be slim. Try to reduce your credit card debt as much as possible in order to acquire funding from lenders. Watch your credit closely if you are applying for a loan so you can remove errors and other things on your credit report that can hurt your score. In order to get a lender to pay attention to you and offer you financing you need to plan on having a credit score of about 750. You can have a 680 but tits not going to be the best with traditional lenders that are naturally weary about financing small businesses. Having a good credit rating will reduce the interest rate on the loan and will also offer better payment terms.

Business plan
A big part of getting lenders to offer you loan options is providing them with a business plan. You need to give them a reason to offer you money and a convincing plan is one of the best ways to do this. With a business plan you will provide them with information about your company, your products, services, customers, marketing, etc. The business plan must convince them that you have a solid idea and you plan to see it happen and become a success.

Business loan options
Once you tie down your credit and you create a great business plan, your next step is to take a look at your business loan options. The lenders you want to work with include online lenders and credit unions as traditional banks most likely aren't going to take a risk on your business. They may find small businesses too high of a risk especially if you haven't been in business for at least a year or more. Online lenders usually have a little more flexibility as they can provide you with the funds, just at a higher interest rate. Although the interest rates may be a bit higher, you can pay them off quickly if you can set aside funds for it with your credit card sales and other things. Here are some of the business loan options you need to discuss with your lender:

  • Secured business loan - this will require you to front collateral but it does give you a chance to acquire the funds at a lower interest rate and you can acquire more money. Fronting business collateral is a wise decision over your personal credit as you are putting your home at risk.

  • Unsecured business loan - a lot of lenders will offer these loans if you have a high credit rating. They do come with a higher interest rate as this will help to reduce the risk to the lender.

  • Private business loan - a private business loan is available for businesses that are struggling to gain financing. They usually have a low limit as to how much you can borrow but you can acquire the funds you need within a day or two.

  • SBA loan - if you are rejected for other loans, you do have the option to apply for SBA loans. The SBA loans ask that you bring at least 30% of the total investment amount to the table as this shows you are serious about making your small business work.

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