What loan options work for your business?


Is your business getting the credit it deserves? Learn how to determine the loan solution that’s right for you.
If you’ve considered starting a business or are currently running an established one, you understand how important credit is to your success. And if you’ve spent any time shopping for credit, you know that there are a lot of loan programs, lenders, and options from which you can choose. So how do you find the one that fits the needs of your business?

You can start by doing your homework. You wouldn’t buy business equipment without carefully researching products, so why not do the same when it comes to financing? Here are some things to consider:

Review the Types of Loans Available

If you’ve considered starting a business or are currently running an established one, you understand how important credit is to your success.If you have a newer, less established business, obtaining credit is not as easy, particularly in these challenging economic times. There are many lenders, however, that offer Small Business Administration Loans. These loans are guaranteed by the Small Business Administration, giving the lender more flexibility in approving you. You should ask your financial institution if they are an SBA lender.

Another thing you’ll want to do is to apply for a business credit card in the name of your business, giving you access to a line of credit that you can borrow from repeatedly. This is a great way to establish a credit history for your business, which will be essential to helping you qualify for larger loans as your business grows.

Determine Why You are Borrowing

The type of financing you require will depend on your reason for borrowing. Do you need to purchase inventory? If so, a line of credit may be a smart solution. If you want to purchase equipment and pay for it in a lump sum, you may want a term loan. Term loans offer the security of fixed monthly payments for a set period of time, whereas lines of credit offer variable rates, but give you the flexibility to borrow repeatedly.

Find a Lender who Understands Your Business

Are you in retail? Or manufacturing? It’s important to choose a lender who understands the nuances of your business and has the expertise to assist you. This will be valuable in helping you manage challenges and capitalize on opportunities.

Shop Around

The first rule of borrowing is to understand that different lenders offer different rates. It pays to call around or visit several financial institutions to find the best rates for you. You’ll also want to work with a lender who not only understands your business, but is also committed to it.

Ask for Lender Referrals

Your accountant or attorney might be an excellent source for providing referrals for good lenders and helping you understand the best option for you. You also may want to ask other business owners in your network. There’s no better testament to a financial institution’s success than satisfied customers.

A little research can go a long way in helping you make the right decision for your business–and getting the fuel your business needs to take off.

 

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