Many people in business suddenly find themselves needing to obtain a business credit loan so that they can improve and extend the opportunities open to them. The need for a loan can arise from a variety of reasons from; needing to buy new technology, needing to buy raw materials, being in the position of expanding your business and needing to move premises …… the list is endless. When you need to get a credit loan you’ll want to be able to find the best deal you can and process it as quickly as possible. You don’t want any delays taking you away from your core tasks – making your business a success and making money.
If you’re in the unfortunate position of having to manage a business debt which again could have arisen for a variety of reasons, which are sadly all too often is because customers are either late with their payments or even worse completely default on them. You will not want to be further distracted by any unnecessary paper work or time consuming meetings to obtain a credit loan to relieve the debt you’ve encountered.
So, whilst looking for an online business credit loan - below are some solutions you can consider.
A lending company or bank can make fixed amount of money available to you that you can draw on as and when you need it, you will repay the loan monthly with interest added on. The good thing about a line of credit is that if you only pay interest on the amount of money you actually take out of the ‘line of credit’. For example, if you’re loaned $20,000 but only use $10,000 – you would only be charged interest on the $10,000. This should be an incentive to you, not use more of the loan than you need to at any one time have. Another good point about a line of credit loan is that for collateral it will be secured against your company/business rather than any personal assets you have, such as your home. A line of credit is a bit like having a business a credit card, the credit card might have a limit of $20,000, but you wouldn’t ideally spend $20,000 on a credit card because of the high interest rate.
Obviously depending on the size of your business, you may be eligible for a small business loan. These usually have low interest rates but regardless of how much of the amount borrowed you use, you will pay interest on the full amount over the period of the loan. Small business loans can be difficult to obtain if your business hasn’t got a good credit record, lenders of this type of loan often require you to meet certain conditions. These will start with having a sound business plan and include; having two or three years with a good credit records, having a good cash flow and either a good balance between your debt and equity or sufficient collateral to cover the loan. A small business loan is a good one because of its low interest rate. The US government, in an effort to support small businesses, has a scheme to help small businesses access small business loans. To find out more about these refer to the ‘Loan Guaranty Scheme’ and the ‘Microloan Program’.
If the amount of money you need to borrow is relatively small, say a few thousand dollars, then a business credit card could meet your needs. The advantage of a business credit card is that there are loads of great deals that you can access and apply for online. Also, following acceptance and approval of your application your credit card will be with you quickly and you can use it immediately. The down side is that the interest rate will almost certainly be higher than a line of credit or a small business loan. So a business credit card really is to purchase smaller items that you are confident you can repay quickly.
When looking on for a business credit card you’ll obviously be looking for a low interest rate, low or zero annual fee, no application costs, no processing costs …. etc. Whilst a business credit card works exactly the same as a personal one, it should also offer you some extra ‘business’ incentives. These might be cheap car hire, cheap travel insurance, hotel room discounts ….. etc. So again, what extras will best suit your business and which card offers the best deals?
There was a time when a business with a bad credit record couldn’t get a loan at all. Fortunately there are now lending companies that will take the risk and lend money to a business with a bad credit record. By searching online you will be able to find both secured and unsecured loans. A secured loan will require either your business premises or property as the collateral, or possibly even your home. A secured bad credit business loan will have a lower interest rate than an unsecured one, but if you default on the loan you could lose your collateral. An unsecured loan in this category will have a high interest rate because it is a high risk to the lender. Securing a bad credit business loan can take a little time, so if you can see you’re going to need one – don’t leave it until the last minute!
If you have a mortgage on your business premises you could consider refinancing it, or even if you have a personal mortgage – usually on your home – you could refinance that mortgage. Either option is not to be rushed into; as if your business doesn’t recover you could lose the property you’ve refinanced. The following applies to either a business property mortgage or a personal property one. (The term property here covers any real estate whether it is land or buildings.)
· Equity release - equity is basically the profit you’ve made on the property concerned. If the value of your property has increased since you took out your mortgage, the difference between the new value and the amount you still owe on the mortgage is your equity. You can negotiate a new mortgage releasing that equity to you, which you could then use as a business credit loan.
· Mortgage refinance package – negotiate a completely new mortgage deal against your property that borrows more than the value of the property. The excess that you borrow is what you can use as the business credit loan. If you decide to take this option you’ll need to be 100% confident that your business will not fail and/or that the value of the property you’ve re-mortgaged will rise in the coming years, at least to match the amount borrowed.
Remember, taking either of these options will result in the property being used as collateral against the loan. If you default on the loan you could lose the property.