When entering into entrepreneurship, you may need extra funds to start your business. And that’s where small business funding comes in. Although starting a small business seems to be easy and cheaper, you’ll need an average of $ 1000 to $5000, and that’s not a small amount of money. But the fact that you don’t have all that should not stop you from pursuing your dream of having a small business. Instead, you should consider taking a loan.
Furthermore, entrepreneurs running businesses may need more cash to boost their business or keep the business afloat during hard times. Whatever the case, applying for a small business loan can make all the difference. Although there are risks involved, the benefits outweigh the risk. Below we’ve explained what a small business loan is, its benefits, and what you need to qualify for one, plus additional insightful tips on small business funding.
What are Small Business Loans?
Small business loans refer to funds sourced from lenders, including banks, and need to be paid back with interest. That’s the most popular strategy for funding a start-up. The good thing about taking a start-up loan is that they do not attract high-interest rates and have friendly payment terms. There are several lenders you can approach or turn to a financial institution such as a national bank.
Reasons to Apply for a Small Business loan
There are various reasons why you should consider applying for a small business loan. These include;
Convenience; you’ll easily find a financial institution in every town that is willing to fund small businesses. So, small business loans are easily accessible, and approaching lenders for this type of loan is easy.
Low-interest rates; if you are a small business owner with an excellent credit score, you can access a loan at a lower interest rate. Essentially, the interest rate depends on your credit score, borrowed amount, among other factors. However, conventional lenders such as credit unions or banks offer yearly percentage rates (APRs) from 4% to 13%. The online lenders have APRs ranging from 7% up to 100%.
Different loan types for different needs; Start-Ups loans aren’t created equally. There are a variety of these loans to meet different needs. For instance, SBA Express loans and SBA 7 (a) loans serve many purposes, including refinancing and growing capital. For machinery, entrepreneurs and real estate business owners can access CDC/504 loans. The SBA deals with various non-profits to give microloans for amounts between $1000 -$ 50 00.
They offer large amounts of money; based on your intended purpose for the loan and the small business loan type. Entrepreneurs can apply for a loan worth higher amounts of money.
Easy application process; although some small business loan lenders can make the application process longer than expected, particularly the SBA loans, small businesses’ funding process can be completed in a day. Besides, you’ll get the funds as soon as possible.
Get the chance to grow your business; small business loans are beneficial as they allow you to increase your business. That’s because technology, human resources, and finance are central when it comes to business growth. Lenders will give you the cash to ensure everything works perfectly.