Starting a business typically involves the need for looking into acquiring business loans from major branches, eg www.commbank.com.au. But you’ll need to see which loan will best suits your businesses situation.
Lenders want to know the exact reason you are outsourcing this finance, largely because they need to evaluate the likelihood of getting their money back and the time frame for doing it.
Also, different lenders specialize in different things. Let’s consider the basic different types of business loans:
- Start-up Financing: This type of loan is used to get the business off the ground, clearly. The money will be used to by such things as supplies, inventory, tools, and so on.
- Business Property Financing: This one is clear-cut. You need a place for your business, and the business lender gives you a business mortgage.
- Business Growth Financing: This is a business loan got by an already established business that is growing and needs more capital to fund expansion to meet the needs of more customers. You will need to show a track record of steady growth in order to impress a business growth lender.
- Inventory Financing: These are loans that you take out to buy more inventory. Businesses that are doing so well that they have the “good problem” of finding it hard to keep enough product in the warehouse to meet customer needs and demands can avail themselves of these loans.
- Motor Vehicle Financing: You might operate a business that has an immediate need for more vehicles for transportation, field agents to get around, etc. Through these loans you can usually find both leasing and purchasing options on vehicles.
- Tools and Equipment Financing: This usually means renting or leasing options on industrial tools or equipment for the small business owner.
- Trade Financing: This is a specialized type of lending that involves a national government’s relationship with centralized banks. It aids in the facilitation of imports and exports international and domestic.
Having a Good Credit Rating
Now, of course, there are certain things you need to do in order to be able to get business loans. One of those things is have decent credit.
If your credit has some black marks against it, you’ll either be turned down or have to pay high interest rates.
You can find loan brokers who can help you find lenders that specialize in poor credit loans, and this might involve your getting a co-signer who has better credit than you, but you will definitely need to be prepared to pay high interest rates and you had better never miss a timely payment at all.
But, if you pay back the principal and interest on time, your credit rating will rise and then you’ll find it easier to get other business loans.
Have a Business Plan
You’ll also need to show a lender your detailed business plan and the details of your plans for using their money. Business brokers can help you with this if you need help. But the most important rule of all is: don’t take out a business loan unless you really need one.
If possible, use your own money to finance your business. When that’s not feasible, turn to the business loan.
Negotiate Your Interest Rate
Make sure you shop around for the best deal when choosing a small business loan. Otherwise it could cost you big dollars.
Different banks will offer different rates. The banks will also be able to customize you a special deal which will suit your needs. They are also willing to negotiate to get your business.