If you can afford to get into small business, you are off to a great start. Otherwise, borrowing money is what you need to do in order to get the business up and running. There are many places that offer small emergency business loans to customers who are new as well as established in their businesses, and most lenders require certain criteria to be met by these customers. With that is mind, let us find out what is allowed and what is not when it comes to borrowing business loans, as well as some facts about small business finance lenders.
When money is tight, is it okay to borrow from friends and family? The answer is simply yes. Friends and family team where you can get money for a small or zero interest. Besides, you don’t have to submit a business plan either unless asked to provide one. The loan borrowing in most of these cases is based mainly on mutual trust, respect and probably, verbal agreement, so go ahead with it.
Credit card companies also offer small business loans but they come with a huge price. If you are very confident with your business and expect to see profit very soon after its inception, this is not a problem. However, when in confusion, make sure to avoid credit card loans as much as possible as they may carry exorbitant fees, interest and other charges that many come as a surprise to you at a later date. So, before you borrow any money from credit card companies just because it is available and intimidating, take a hard look at your situation and reasons to borrow.
Small business loans can also be obtained with proven track record. Certain financial institutions lend to customers who have a promising future but lack credit history. This means you don’t have to be an already established business to prove your worthiness. In order to increase the chance of getting money, show your business plan and explain to the lenders its potential one or two years down the road. If approved, you will also need to periodically update them with all the latest developments in your business and your finance situation as well. Institutions that offer this type of loans come in all sizes and forms and most are local organizations or private individuals.
Note that bank loans are not easier to find especially when there is little to show that you are capable to run your business to its success. Commercial lenders, in fact, tend to shy away from small businesses because they believe the risks are too high for the interest they earn. As a result, many business owners who are starting out find themselves in a loop where they need to show a solid record and bank won’t lend otherwise. In such cases, it is in the interest of these business owners to look for smaller lenders with good reputation and reasonable interest rates. All you need to do is do some research or call around to find out.