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Business loans can be defined as money lent for a specified amount of time
at a specific interest rate to a specific person or people that operate a
business or plan to operate a business. This definition is very broad, but
so are the various types of loans available to business people. Deciding on
which type of business loan that you and your company will benefit from the
most is very important. Often times, a start-up business or someone that has
never owned a business will find themselves more or less applying for a
personal loan. This can be a very risky endeavor, mixing business loans with
personal loans, however, often times it is the only available means for
first time business owners.
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One of the first things personal business owners need to do is establish
business credit. Business credit can help you get a business only loan
without using your personal credit. Establishing business credit can be done
by:
1.) Opening up a business credit card account and paying it in full.
2.) Buying equipment and supplies from companies that will report good
standing to the business credit bureaus.
3.) Having a good business plan with potential earnings, letters of
intent, and any type of customer contracts already laid out.
All of these types of endeavors can help in receiving a business loan.
Often times, financial institutions require in-depth business plans, be
prepared to spend days working on just the certification paperwork prior to
applying for a business loan. A business only loan can be obtained in the
business name without use of personal credit as long as the business can
justify the loan amount and the ability to pay it back.
There are several different types of business loans available, ranging
from those secured with collateral, non-secure loans, which are based upon
the credit worthiness of the applicant, and even government loans for small
business ventures, women and minorities. Government loans are those loans
secured by the government; in most instances these loans are available when
the business or owner can prove that the community will prosper based upon
the business at hand. For the most part, government loans are based upon
personal credit.
The basis for which you may need or require a business loan may vary.
Some of the most common business loans available to business owners are:
- Acquisitions or a loan to acquire an existing business
- Inventory loans
- Account Receivable Loans
- Working Capital Loans which converts a companies assets into working
capital
- Equipment Leasing
- Commercial Property loans
- Warehouse financing
- International business loans
- Franchise loans
One of the most important tools when deciding on what type of business
loan your company needs is research. Researching the different types of
loans available to you and your company can save you money. First, look into
the different type of business loans available to you in your state. Many
states have government loans available; some even offer grants, which is
money available for specific purposes that do not require repayment.
Research the different type of Federal loans available. You can do this at
the following website: www.sba.gov. Call your local bank and investment
companies regarding the business loans they have available for you. Many
times, business loans are not that hard to acquire. With research and a good
business plan, your dreams may come true.
About the Author:
John Williams is the business loans blogger at http://businessloans.blogspot.com
He reviews business loans and interprets complicated financial data into
simple to understand language.
October 2005
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