Securing Loan Funding For Your Business

0
0
0
0
0
0
0
0
0
or copy the link

Starting a business generally requires a significant amount of capital. Beyond the initial stages, growing businesses can benefit from loan funding and investment, providing the fuel for expansion and development. At various stages in the business cycle, it may be beneficial to consider lending options, usually for funding particular projects or working capital. Business leaders, from CEOs like Cecilia Ibru Behance to small, local, mom and pop stores, have to decide whether borrowing is right for their business needs.

Different types of lending products are available to businesses – each with their own advantages and disadvantages – and there are a few questions you should be looking to ask of any loan product when raising funds for your business.

securing-loan-funding-for-your-business1
Image source: http://www.barondelivers.com/images/services/warehouse.jpg

There are many different types of funding available to businesses. From credit cards at the most basic level, through to loan and asset finance deals, there are a variety of funding channels available to business borrowers. Most businesses have access to an overdraft facility, which gives them a cushion, if necessary, to temporarily borrow on their account.

But overdrafts can be expensive, and they are not necessarily ideal for specific purchases. For these situations, or for larger amounts, it may be necessary to opt for a more traditional loan arrangement. In some cases, this might be a mortgage, or linked to a particular asset. At other times, it will be a loan based on nothing more than an assessment of the creditworthiness of your business.

When you are borrowing on behalf of your business, one of the most important things you need to ascertain is whether you are being offered an unsecured loan, or a secured loan. A secured loan will give the bank a security over some of your assets. This may be your personal home if you are a director. It may be your office building, a particular asset, or the total value of your assets, in the case of floating lien/charge-style arrangements. You need to get to the bottom of whether security is required, so you can think about whether the loan you are being offered is right for your business.

securing-loan-funding-for-your-business2

Image source: http://www.ca-cib.com/sitegenic/medias/IMAGE/84644/photo-marion-thorel-5.jpg

It goes without saying that you must calculate the repayments you will be due under any loan. Don’t go too high, or you will put pressure on your financial position. Work within your budget to calculate how much you can afford to borrow, based on manageable repayments your business can meet in good months and in bad. Inexperienced business owners can often make the mistake of taking on too much debt early on, leaving them with significant interest and repayment costs to bear. This can actually hamper business progress long-term, and it is preferable to keep your business debt levels as low as possible.

Businesses of all sizes can benefit from borrowing money. The additional funds can be used to expand the business, or to reach out to more customers, providing a direct return on the investment. In these cases, it can be particularly beneficial to secure funding at an affordable rate. So long as you understand your obligations, and you are confident your business can keep up with the repayments, it can be an important part of the wider funding picture.

Comments: 14

  1. Hillary December 10, 2013 at 5:10 am Reply

    With a current credit score of 710,will i be considered or accepted for a personal loan of about $30,000 to start a business if i have a car and financing it? Will a new car financing( from another lender) hurt my chances of securing this new loan to start my business? ( By the way my car was $22,000 and i havent missed a payment for about 4 months i got it)

  2. Phung December 17, 2013 at 4:03 pm Reply

    I need to take inventory is there any apps i could buy to help me? Do i register for a small business? or when do i register?

  3. Columbus January 3, 2014 at 12:40 am Reply

    I want to open a small but cozy cafe and i have figured out the cheapest way to start it but due low savings i am not able to open it.If somebody could suggest me the way to fund it.Its difficult for me to secure a loan since banks are asking for a collateral and i have none.I wanted to open the cafe in canada but couldnt get te visa in time.So i am thinking of opening it in Delhi INDIA.
    Any suggestion can be useful. Thanks

  4. Clelia January 5, 2014 at 12:00 pm Reply

    As a business manager should you be concerned when notes payable are used in funding the operations of the business?

  5. Lee January 23, 2014 at 5:26 pm Reply

    Two of my friends want to start an international company based in the USA which will require a couple of million dollars to start.

    To give you a brief background about them, they’re both Ivy League graduates – very smart people. Both of them make nice six-figure salaries working for big organizations. However, they’ve never started a business before, never ran a multimillion dollar entity nor do they have a lot of business collateral. They haven’t done anything to start the business yet and have no track record of it being profitable (or successful). But, their business plan is rock solid and really good. They have already assembled a terrific team that will help them with their endeavor.

    So, what do you think are their chances of receiving funds for their business idea?

  6. Mervin February 22, 2014 at 2:15 am Reply

    I am planning on starting a small business in the near future. I know this is very general but I would like to get some advice on how to register one and initial steps to get started. I appreciate any comments. Thanks. I just took an entrepreneurship class at school and I hope to carry it out.

  7. Bianca February 25, 2014 at 5:52 am Reply

    and what is required. How much should you borrow. Ex. 3 yrs worth overhead and product?
    Also put down how much I should borrow. 1 years? 3 months?

  8. Mason March 4, 2014 at 12:42 am Reply

    Hello I graduated from college about 1 1/2 ago and I’ve been working at a pretty good entry level job the past six months. Well I’m tired of driving my beat up college car and since I now have a stable income I would like to buy my first car. Unfortunately I haven’t had much success, because I have not been able to secure financing. As far as I know I thought I had good credit my credit score is 730, I only have college loan debt, and I always pay my bills on time.

    I have gone over the rejection letters and they state that I have a lack of installment loan history. Well how am I supposed to get my first one? It also states my credit accounts have not been open very long. I have two credit cards, one I opened in college I’ve had four years, and another one which has a higher line, for emergencies for 2 years. I’ve been told to try with a co-buyer, but I was put in foster care as a teen and don’t really have anyone I feel comfortable asking?

    Can someone give me some advice, please?

    PS I’m not looking at anything over the top (Jeep Compass).

  9. Ariel March 9, 2014 at 7:09 pm Reply

    I have an idea for business. Where should I begin?

    What comes first the business plan or forming a corporation. I will also need some investors who I will give a portion of the business to.

    Also I will need help writing the business plan so im thinking of first finding investors who are interested then forming a corporation with them and then we all write the business plan together then go from there.

  10. Rogelio March 9, 2014 at 7:09 pm Reply

    any advice ?

  11. Brandon April 3, 2014 at 12:24 am Reply

    I applied for a credit card (and was denied) and the person who I spoke to said for my husband and me to take out a shared secured loan to help our credit. She told me something like you give them money and they loan you the same amount and you pay it back overtime. Can someone tell me a little more, like does the loan get payed with the original money you gave them, or do you pay the loan back with your own money and get the original amount back at the end?? I am a little confused on the whole process.

  12. Cortney April 3, 2014 at 12:24 am Reply

    Hi. How can I do business with and inside Saudi Arabia. For instance, what does Saudi Arabia produce besides oil that could be exported to other countries on a large scale?

    Also, how can I find Saudi Arabian banks and businesses to open fund raising finance firms to provide loans in other countries?

  13. Leonardo May 6, 2014 at 12:15 pm Reply

    i was trying to get a small loan and was approved for a 10,000 secured loan lender agrees to establish a account to me and fund $10,000 into this account and i agree to sign its rights to this account to lender

  14. Arletha June 7, 2014 at 10:10 am Reply

    I started a computer shop 4 years ago here in the province of Cagayan Valley. Now with 10 computers, I want to expand so am looking for financing company so I can borrow additional capital for my business expansion.

Leave a Reply

Your email address will not be published. Required fields are marked *