Starting a business requires capital. The capital will be a start-up of operations before you get to start investing back profits for growth. As a small scale business stater, credit is one of the forms of financing you can look for. There are several money lending options you can consider for this, and all you need is to convince the institution of how viable your business will be. Most money lending institutions will only give you credit once they look at your business plan and see a possibility of growth. However, you may use your assets to secure a loan.
While you are looking for credit from a financial institution, there are a few factors you need to consider. They may include:
1. Interest and fees
While you pay back the loan, you will be required to pay an interest cap based on the amount you borrowed. As a wise business person, go for that lender who will give you credit at a low-interest rate or percentage so that you do not end up paying a lot back. Check on how the interest is also spread withing the payment period and also other fees attached. Additional costs such as closing, taxes and agreement will add up to the total amount to be paid back. Make sure that you are paying as little as possible back and benefit from the loan so that you can not drain all your profits on the loan.
You will also need to consider the installments period and amount. While you are paying back, you make partial payments spread out in the agreed payback period. Choose an institution with a relatively favourable installment period that does not attract lots of interest in it. Also, choose one that has installment amounts that are reasonable for you to pay so that you do not end up attracting penalties on failure to make the deposit.
3. Amount of credit
As a small scale business, you need to consider how much you need from the institution. Some financial institutions have credit caps on types of companies, and therefore you need to choose one that suits your class. Always go for the most available option that can give you the sum you need and has terms and conditions that are mutually beneficial. Do not take too much credit as you will be draining your business.