There comes a time in all business lifecycles when a loan is the best option to secure your continued growth. Whether this occurs at the very beginning of your journey, or a stage when you’re considering expanding your reach and your customer base, you still need to ensure that you’re getting the right kind of loan to facilitate the change that you’re looking to make for your firm. In light of the importance of the loan’s structure and terms – and the freedom it gives you to invest in your firm – this short guide introduces three key indicators you should consider when securing a loan.
Perhaps the first and foremost thought in your mind when you’re looking for a loan is how much you’re going to have to pay back in interest. You’ll be well aware that money doesn’t come for free – and that your investment will require returning with a chunk of cash that the loan company will ask for in interest. The question is: what interest rate is best for your firm?
Of course, those who are looking to pinch the pennies and avoid large debts will chase lower interest rates – but these rates come with less favorable terms in other parts of the loan. The best way, therefore, to find the right loan for your company, is to look beyond the interest rate, and to compare loans on several different indicators.
Secured vs Unsecured
A secured loan is so-called because the value of the loan is secured against the assets that you hold as a company. This means that your lawn provider can rest easy in the knowledge that if you waste your loan and cannot repay it in cash, they will be entitled to parts of your business as collateral. This is generally regarded as a good deal for the lender, and a bad deal for the loanee.
A better way to take out a loan follows that unsecured pattern: you simply repay the loan, in cash, alongside an agreed-upon repayment scheme. If you miss repayments, a clause is triggered in your loan contract that ups your debt. This is your incentive to repay on time. Important small business loan companies such as biz2credit deal in these unsecured loans – easy to take out online.
When you’re shopping around for business loans, it’s often exciting to picture just how much cash you’re going to be able to bring into your firm to plan your expansion and growth. Imagining an additional raft of funding is exciting and exhilarating – but not always useful.
You should always keep your focus on the funds that matter to you. You should have don’t your homework and planned exactly how much you want to invest in growing your business. Never be tempted and seduced by getting more cash in a loan than you need – it’ll only increase your debts and leave loan cash in your company bank account.
Use the tips outlined to help you decide which types of loan to take out for your firm this year.