Are you trying to figure out how to get a business loan?
Businesses require money. Most entrepreneurs need some money to help get them off the ground. Even when things are going well, funds can be necessary to fill gaps and finance scaling. There are also times when companies want to bulk up on cash and access to credit in order to survive crises and disruptions. Business loans can be a great way to fill this need.
Why Get A Business Loan?
There are many uses that you need to keep in mind before tackling how to get a business loan. Even when you don’t immediately need the cash, savvy entrepreneurs have learned it is wise to stock up on capital in advance of their needs.
In a crisis access to credit and capital can dry up quickly. Just as we saw with Chase and Wells Fargo Bank just weeks into the COVID-19 pandemic. Take it when it is available.
Some business owners also see some advantages of loans over raising equity capital. Equity fundraising can provide access to much larger amounts of capital, with no burden of monthly debt service. However, loans can help avoid all of the extra work, distraction, and time drain of fundraising.
Especially in the early months when you are intensely focused on making the business work. This strategy may also help preserve your control and ability to make your own decisions about your venture and for your customers. Though this can mean foregoing the expertise of Venture Capital investor partners.
Types Of Business Credit
There are a variety of types of business credit available which may help put some light when wondering how to get a business loan. Each can have its place on your journey.
Business Credit Cards
One of the easiest ways to start out with business credit is simply with credit cards. These can be simple to apply for with a couple of clicks. It is a foundational move for separating an entrepreneur’s personal credit and finances from the business.
Some cards will offer over $10,000 or more in initial credit lines. A few of these can go a long way to getting a startup off the ground. Even better when they offer 0% interest and other introductory deals. Just watch out for those payments which need to be paid each month.
Business Lines Of Credit
The next step up is a line of business credit. These can be easier to obtain than you might think. They are generally larger than you’ll find with credit card limits. Though, their revolving nature makes them like credit cards in many other ways. The fees are usually low, and you only pay interest on the portion of the credit you are actually carrying as a balance.
One risk most don’t talk about is that during times of financial crisis banks have been known to slash credit limits. They do this with credit cards as well. So, be wary of relying on these for emergencies.
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