Starting a company can be intimidating at times, but the perks of being your own boss and leading a company with your own vision sounds great. Not all of us have the means to just wake up one day and start a business, a lot of us will need some help. Having a piece of the American dream where anything is possible is something very realistic, so what should you be looking for when investigating small business funding?
Just like when you apply for any other sort of funds, you need to take a look at what your interest rate is going to be. These things are usually determined by your personal credit history and the terms of the contract that you wish to seek. Of course, getting the lowest rate possible is going to be preferred, but knowing how to achieve a lower rate may mean focusing on your personal finances for a period of time than pursuing business funds. By now, we all know how compounding interest works and we all want to be able to pay off our debts in a reasonable time. So make sure to look at your terms and see how often that interest rate is compounding.
What Type Of Business Funds Are You Taking?
When most people think about loans for a business you might compare it to your mortgage payment. You finance a set price and pay interest on this principle until a certain time. But in the game of business funds you might opt for something like a “Balloon loan” where you will only pay interest throughout the end of the contract period and then you are responsible for the full sum of the principle. Also look at the option and what I would suggest is a line of credit much like a credit card you would take for yourself. This way it allows for flexibility to a maximum amount set and you pay and spend as much as you see fit. Just be sure to shop around because there are many different types of credit lines you can take for your company.
Outline The Fundamental Costs
Eventually, with all the right information, your company will grow to the desired size you see manageable, and we all aim for the stars. Nothing wrong with that at all, but you should outline how the money is going to be spent and then budget in the payments. This needs to be formally drawn out not only to keep your spending held accountable but paints a better picture of your company finances. Do your best to borrow for the company you have now, not the company you want to have years from now. Estimate very conservatively here so that it keeps the dream and vision of your company alive and as stress-free as possible and hopefully spark as much innovation as possible.
Consider The Alternative - A Merchant Cash Advances
This is a route that has a quick turnaround option for getting money to your business quickly. This type of funding is faster because it does not weigh heavily on things like available collateral, personal credit score, or history in business. During the cycles of business, you may find that your company is in a slower period of business and bills need to be paid right before business picks back up. The one unique thing about these merchant cash advances is the way they are paid back by your credit and debit card sales. So, over time, this type of financing is being paid off but with no hard deadline. The turnaround for business capital like this is as little as one to two business days.