Tuesday, March 5, 2013

Understanding Small Business Loans

English: Austell, GA, October 26, 2009 -- Aust...
(Photo credit: Wikipedia)
If you are thinking of getting a small business loan, you must know what you are getting into and be prepared. Financial institutions are becoming more timid to loan money in this market so your plan must be concrete. Look extensively into your business and see what the top priorities are and what needs to be done in order to make it more successful. Think big picture and make sure you understand the difference between needs and wants for your company. 

Some things to consider are:

  1. How much do I need? Be wary not to take too much or too little. 
  2. What exactly will this loan be used for? The more detailed the better. 
  3. How much you can afford to pay on the loan each month? Be realistic. 
  4. What assets can you use as collateral? 

Make a plan

Use the questions above to help you decide what you really want out of a loan. A small business loan is usually a big commitment and with any big investments like that you want to make sure you go into it knowing exactly what the money will be used for, how it will improve your business, and have confidence that you will be able to pay it back entirely. 

Asset assistance

Financial institutions are not known for handouts. They want to protect their investments and this can make getting a small or a large business loan difficult to attain. When you go into a loan you want to put your best out there and show them you are responsible and able to meet your burden of the loan. Handshakes and verbal promises are long gone, but assets speak volumes. If you are certain that this loan will further grow your capitol game it may be necessary to use assets to back up the loan. Assets can be anything from:

  • Equity on your home 
  • Real estate property 
  • Inventory or equipment 
  • College funds/IRA’s 
  • And more 

If your assets are low, you can also consider having a cosigner for the small business loan. 

Use it right

Once a business loan is secured it is up to you to make sure the funds you receive go to precisely the areas you want it to and that it is making a difference. If you begin and realize that this isn’t what you were expecting that sit down and draft another plan until you reach the scenario that will best suit your business needs and long term goals.

Often times a financial advisor can help you do this and make sure you get the most of of the loan. If you didn’t qualify for as much as you were hoping, a strategic planner will work with the numbers to ensure that your business will not only make enough for you to get by, but for the company to thrive. Ultimately that is any business owners' goal, to grow and grow. 

Small business, big results

If you are reading this, chances are you are a small business owner. The best advice to anyone in your situation is to plan, plan, plan! The more you take a step back and plan for your company the better the outcome will be. You need to continually re-evaluate what is best and when the time is right to go for a loan to help build it even more. Click Here to find out more about Business Loans.

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