Business Loans for Startups
A successful startup could be your stepping stone to financial security. What begins as a small business could blossom into a successful enterprise. However, most startups encounter one major hurdle: a lack of capital. When capital is not readily available most small businesses seek loans to help them get off the ground. Before you apply for a business loan know the following:
If you have a better option — home equity loans, a credit card loan, 401(k) loan, a rich relative loan — think twice before borrowing without collateral. But if you have no other way to go — or are hell-bent on it — take these tips.
Do your homework. Go to bankrate.com’s current personal loan rate survey and find the best interest rates in your area or call up a handful of local banks and compare prices. Ask if the interest lending rate is fixed or variable and what the rate cap is. Also inquire about annual fees.
Credit Union Loans
If you belong to a credit union, forget tips 1 and 2 and just go there. Interest rates on unsecured loans can run about as much as one or two percentage points lower than major banks.
Community Bank Loans
If you do business with a community bank, take advantage of the human factor. Being a familiar face can earn you some slack if your credit background is smudged. Small banks might offer lower interest, too.
Be honest about why you want the loan. Your bank may be able to offer you a loan option you hadn’t thought of, or perhaps that Jet-Ski you’re eyeing can be used as collateral, thereby securing your loan and trimming interest.
Applying for a Loan
Don’t fill out applications at several banks and have all of them checking into your credit history simultaneously. This can make you look desperate and lower your credit score.
Save some money for emergencies so you don’t have to do this again. In the long run, it’s cheaper.