Considering a small business loan? Here’s what you need to know

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Taking the leap into small business ownership takes courage. It also requires a multitude of skills, a huge amount of determination and a vast array of knowledge, from an in-depth understanding of your specialist field right through to aspects of resource and financial management.

Whether you are just starting out and need an injection of cash to get your business up and running, or your business is going gangbusters and you want to expand, there may be times when you need to consider a small business loan for a range of reasons.

But successful entrepreneurs don’t leap into new things without doing their homework, so if you’re considering a small business loan, here’s what you need to think about first:

Why does your business need a loan?

Does it require an injection of cash flow? Or are you looking to expand and now is the right time? Perhaps you need to purchase a substantial piece of equipment, or you’ve seen a fantastic opportunity you want to explore. Whatever the reason, the reason for needing a loan can influence which type of finance is best for you. Your lender will want to know what the loan is for.

Which type of finance is best for your business?

Consider if a debt via an external loan source such as a bank is what your business needs. Perhaps an equity loan – finance from a partner or investor – might be a better option for your business. Or can you utilise internal funds generated from profit to put back into the business?

If you decide a business loan is your best option, you are ready to consider potential lenders and the solutions they offer.

Various types of business loans

A business loan expert will understand that running a small business has its challenges, which is why they offer a variety of loan solutions to suit your requirements. Their business loans will help to provide your small business enterprise with cash flow, pursuing opportunities for growth and expansion, equipment purchases, general business development opportunities, and setting up your business in the first instance.

Many loan providers offer a variety of short and long-term loan products, so consider what your business can withstand and what works best for your enterprise.

What will lenders want to know when you apply for a small business loan?

In most situations, if they don’t already know, your lenders will assess your character in the first instance. Are you a sound investment? Is your business plan well-constructed and viable? Do you have a positive savings or loan history? They will also assess your capacity to repay the loan, and what capital you have. They will discuss the terms of various loan solutions with you, that is the length of the loan and the repayments and also what collateral or security you might have.

Can a financial adviser help?

When running a small business enterprise, a financial adviser is a valuable resource. Not only can they advise on the financial aspects of managing your business, but they can also assist with your loan application, taking any stress you might feel out of the process for you.

Are you considering a small business loan? Why not schedule a meeting with the team at Mortgage House to discuss your business’s financial needs? Call 133144 to request a call back from a lending specialist, or ask a question online before making an appointment to discuss your small business needs.

 

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Cec is the managing editor of KBB. She is a multimedia professional with over fifteen years experience as an editor on titles as diverse as SX, CULT, Better Pictures, Total Rock, MTV, fasterlouder, mynikonlife and Fantastic Living. She has spent the past four years working as a news journalist covering all the issues that matter in the political, health and LGBTIQ arena. She is the Head of Content at Pinstripe Media and a recent convert to the world of small business.

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