A small business loan might be what your business needs. For example, many resources are available to help you get the funds you need if you decide that this is the right move for your company. In addition, many types of small business loans are available, including SBA loans, invoice financing, startup loans, etc.
While you may hesitate to apply for a loan because it does carry a risk, the rewards can make it worth it. For example, there is a risk involved – you will need to be able to repay the loan with interest. For example, if you needed to put down some collateral to procure your loan, your company could lose the property if you default on the loan.
Yet many business owners calculate the rewards outweigh the risks.
Benefits of a Small Business Loan
There are three main benefits that you may experience by getting a small business loan. These are:
- Loans allow you to maintain ownership: There are situations where you may lose equity in your company. Since this is something that you’ve invested a great deal of time and effort into and your own money, the last thing you want is to lose ownership. A company is most attractive to others when turning a profit or growing. Yet this is the time when you might most want to keep ownership! A small business loan could be the solution you are looking for.
- Loans can help you grow your business: Do you need to hire additional workers? Move to a better location? Invest in additional equipment or expand into additional product lines? Whatever your small business’s specific needs to grow, a small business loan can help you manage the costs. Since you are investing in things that will foster growth and greater profits, the rewards could greatly outweigh any risks in this situation.
- A loan could improve your credit score: Businesses, like individuals, have credit scores. If you have a startup, building good credit could be vital. Getting a small loan that you qualify for and paying it off on time can help your company over the long term.
What’s the Next Step?
How would you proceed if you have determined that a small business loan is right for you?
There are several steps you should follow:
- Build both your personal and your business’ credit scores. The better your credit score, the more favorably a lender will be towards you.
- Know the lender’s minimal requirements. For loans backed by the Small Business Administration (SBA), there are specific criteria you must follow, whereas a bank loan will be based on traditional factors but may be more expensive in the long run.
- Get your legal and financial documents in order.
- Develop a strong business plan. You may want to hire someone to help you do this.
- Be prepared to provide collateral.
When you are ready to apply for a small business loan, check out Lantern Credit by SoFi. You will find all the information you need to help you make the best decisions regarding your small business loan.
Also, according to Lantern Credit, “There are loans designed for specific uses (e.g., equipment financing) and loans that may be used for a variety of business expenses (e.g., SBA 7(a) loans). Comparing the options can help you determine what type of loan and which lender best suits your small business needs.”