Business Loans - Why, What and How
- why you might need a business loan, what types are available and how to get one!
Reasons You Might Need A Business Loan
There are many reasons why a business might need a loan. Many of these are legitimate reasons. Some are not -
like if you think you need a loan, but really you need better cash-flow management. Remember however, that
all loans are risky - so think and plan before getting your business in debt with a loan.
The following are a few good reasons for needing a business loan:
- Starting up a new business
- Expanding an existing business - with inventory, equipment or property.
- Acquiring other companies
Types of Business Loans
There are even more types of business loans than there are reasons for needing one! It can be quite a confusing
task to figure out what kind of loan you need with all the different terminology thrown around! One of the first
things you might want to consider is if you need a short term or long term loan.
Short term loans are usually only for a year or less and are great for seasonal flucuations in a business.
Some of the loans that fit in this category are accounts receivable loans, lines of credit and
working capital loans.
Long term loans generally are for 1-7 years or longer in some cases. These tend to be used for buying more
expensive things like a car or truck for a business, new buildings or renovations, etc.
For a longer list of availble loans:
SBA Business Loans,
start-up business loans,
working capital loans - both secured and unsecured,
accounts receivable,
merchant account cash advance,
lines of credit,
acquisition,
inventory,
franchise start-up,
professional,
Equipment financing, sale-lease back and leasing,
livestock finance,
purchase order financing,
commercial property,
residential equity,
construction financing,
machinery
and
business only loans.
Overwhelming isn't it!
How to Get a Business Loan
One of the first things you need to before trying to get a business loan is to have a good business credit profile.
It will help you to get loans in present and future, to extend your cash flow, build better credibility,
and lower your interest rates. Having a good personal credit score can help with this as well as having
small lines of credit with a bank.
Be prepared ahead of time to get the loan - make sure your business plan is updated, be specific about what
you want the loan for and how much you need as well as how you will pay it back. Also helpful is to
have a business bank account and trade references
for your business
It is also best to package your loan request in a professional looking manner. The request should be presented
in a certain way, specific to the lender you are trying to get the loan from. There are professionals that
prepare these types of things for people.
You will likely also need things like tax returns and other financial papers from the preceeding two years - for
both yourself and your business.