Things You Should Know Before You Agree to a Business Loan
The right business loan helps your business grow. There are things to think about when you're deciding how much to borrow and what type of loan is best for your company. Before you head to Capital Loan Hub to apply for a business loan, consider these six points.
Business Loans Can Affect Your Estate
If you take out a business loan, talk to a lawyer about protecting your family from unforeseen events. If you’re registered as a sole proprietor, there is a chance your spouse or heirs could be liable for your business loan repayment. The actual laws depend on where you live, so it’s best to check with a lawyer about what would happen to your business loan if something happened and what you can do to prevent them from liability.
Grants Cut the Amount You Need to Borrow
There are business grants available for specific industries. Check the listings at the Small Business Administration’s website and see if you qualify for grant money. This helps reduce the amount you need to borrow. Even if you don’t get the grant, the chance at getting free cash is worth the effort.
Make Sure You Think of Future Needs and Business Fluctuations
Once you have a business loan, it will affect your ability to borrow more in the future. If there’s a chance you’ll need more money after the initial loan, a business line of credit may be to your advantage. Otherwise, a short-term business loan can be the better option. You don’t want to end up in a situation where your current business loan prevents you from getting the funding you need later. Consider possible fluctuations like slow seasons, clients that pay bills late, or equipment failure when you calculate what you need to borrow.
Not Every State Bans Prepayment Penalties
If you take out a business loan and your business booms, you may become tempted to pay off your loan early. Make sure you’ve checked for prepayment penalties first. Some states allow lenders to charge prepayment penalties. If you can negotiate loan terms that eliminate any financial penalty for paying off the loan early, make sure you do.
Personal Credit Score Matters Just as Much as Your Business Credit
For a new business, creditors look at your personal finances when deciding if you qualify for a business loan. Before you apply for a business loan, look at your credit score. The government requires the three major agencies – Equifax, Experian, and Transunion – to allow consumers to view their credit report free once a year. Before you apply for a business loan, make sure your credit report doesn’t have errors. If it does, agencies have 30 days to investigate your complaint and decide if you’re claim is valid.
Repayment Plans Vary
The type of business loan you request determines the repayment requirements. Some business loans take the payment from your daily revenues, while others are paid monthly. Take a close look at your projected revenues and expenses and decide the best way to borrow money. You don’t want to end up struggling to pay the loan on time.
Capital Loan Hub helps match business owners and lenders. There’s no fee for our service. Answer a few questions and we’ll do the legwork for you. Once we have lenders who want to work with you, you choose the rates and terms that best fit your needs.