Small Business Loans. How To Choose Which One Is Right For You.

Finding financing to open a new business or expand a current one can be a challenge

. You can have personal investors, public investors, get conventional business loans, cash advances, secured loans and unsecured loans just to mention a few. How do you choose which one is right for you?

The first thing you will have to take into consideration is your/your business credit score. Poor credit scores will hinder your chances to get conventional loans but there are other avenues.

The next big detail is the amount of the loan. Many lenders have minimum and maximums based on the type of business. Many lenders will also want collateral. If your company wants a $20,000 loan you lender wants $20,000 or more in collateral.

Another thing to think about is how much hassle you want to go through to get the money. Conventional loans require tons of paperwork and business plans. They can also require lots of waiting time and definitely a good credit score.

Once you have the minor details worked out then it is time to take action and get some money. You have four primary avenues to get the funding you need.

Investors

I have worked with investor and have been an investor. When I started in the real estate business I was 24 and did not have any credit established so conventional lending on investment properties was difficult. I joined forces with a Lawyer that would put up the cash to buy and remodel the property. Once the sale of the real estate was final he would get his initial investment plus interest. The interest was normally 10%. If you can find someone with the money than this can be a great option.

Small Business Loans

This option is where most people start their process. You will need an informative business plan, good credit rating, and be in an industry that the lender sees as profitable. These types of loans can be secured which you have to put up assets. You default on the loan the lender gets the assets as agreed on in the loan contract.

Unsecured Business / Unsecured Personal Loans

These types of loans can be easier to get but, the down side is the interest rates are higher. Some lenders take your credit score into consideration and some do not. Lenders dealing with these unsecured loans can be very creative and open many windows.

Business Cash Advance

Business Cash Advance is based on Credit Card sales and not a merchants credit score. There is no interest rate involved. The lender charges a fee for the advance. Requirements differ from lender to lender and are minimal. Normally they are a couple months credit card statements and business license. Business advances can be completed in as little as 24 hours. Most advance companies require that you use them for your credit card processing. The reason being is that a small percentage is taken out of the merchants" credit card sales. This is done until the advance is paid in full. If you find a company that requires you to switch make sure they will match your current processing rates and are a reputable company.

by: danwisner

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