Whether you are a new business owner or a veteran with a business that has been in existence for years, there usually comes a time where financing is needed.
This is because a lot of capital is needed to finance the many aspects of a business. While conventional loans can be obtained for business purposes, the following are reasons to consider business financing instead.
1. Easy & fast
When you need money, you want to apply quickly and get an approval quickly. This is especially true if the very existence of your business depends on whether or not your application is accepted.
Business financing is beneficial because the application process is easy and fast. Conventional loans through banks require as much information as possible and before the application can be approved or rejected it needs to be sent through numerous tiers of management. Business loans require minimal information and usually without any collateral to secure the loan. You often receive an answer regarding whether your loan is approved within hours.
2. Repayment options
Like many other business, yours probably experiences peaks and valleys where profits are high during certain periods and low at other times. As a result, money to repay loans sometimes is not always so readily available.
Business financing is a perfect option for companies with stable yet fluctuating profit margins. Repayment options can be fixed with withdrawals made at weekly, bi-weekly, monthly, or quarterly intervals so you do not have to worry about making deadlines. However, for periods of the year where profits are scant, you can make minimum payments or defer them until a time when you are gaining significant traction once again.
3. Low interest
The prime objective whenever you get a loan is to get one with the lowest interest rate possible. That way you will not be charged much more than the original amount and when you make payments more of it will go towards the principal.
The interest rates of business loans have been hovering around 4 to 6 percent for quite a few years. Conversely, the interest rates for conventional loans have been anywhere from 6 to 35 percent for unsecured loans for the same time period. Obtaining business financing instead of a conventional loan will save you a significant amount of money in interest. Allowing you to put revenue to other areas of your business as needed.
Running a successful business takes a lot of capital. When you need a boost to be able to pay for everything you need to, it is natural to seek out a loan to help you. However, you do not want to be restricted as to what you can use it on.
Business financing benefits many businesses because of the freedom it affords them. There are no restrictions on how you can use your loan once you are approved. Therefore, you can put it towards ares crucial to the success of your business, such as rent, salaries, equipment, inventory, and even expansion.
5. Term flexibility
It is hard to anticipate your ability to pay back a loan sometimes. Consequently, you may need to change your term conditions on occasional so they work for you better and you are not defaulting. This is a perfect reason why business financing is a preferred option among many business owners.
Business loans are available in many lengths, usually anywhere from 2 to 10 years. As a result, you have the flexibility to pay it off it profits or high or choose a longer term so you have time to pay it back slowly as profits increase the longer you are in business. As mentioned, business loans can also be unsecured, allowing you to avoid putting forward anything up-front. That way you are not giving up anything that could threaten your ability to run a successful business.