Start Up loans can help small and big-time entrepreneurs meet urgent needs especially when times are rough and money is elusive.
Are you starting a new business or planning to expand your current business? Capital is essential in whatever stage of business. But not all banks are willing to lend money to individuals and partnerships with limited financial documents and less than stellar credit score. A little trip to the financing institutions may prove that. If you’re serious into getting working capital to fund your business, you can apply for startup loans from a reputable financing company.
Uses of Startup Business Loans
Supports borrowers who don’t qualify for traditional loans
Bob, a sole proprietor wants to buy necessary equipment for his t-shirt printing business. His office premise needs some upgrading and he also needs to fill his inventory anytime soon. But, he just started with his business. He has no income tax returns in the past three years, and he cannot present proof of income that banks require. Though his business is earning well and he has the capacity to repay the loan, the banks won’t hear of it. They turned down his application simply because he cannot present the financials they need to prove income.
If you are facing similar dilemma like Bob, it will be advisable to apply for start-up loan to meet your urgent needs quickly. This type of funding is known for its easy approval and low documentary requirements. Reputable lending agencies like ALC Commercial designed this type of loan product for entrepreneurs who are usually turned down by banks because they don’t meet the eligibility criteria for regular borrowers at banks.
- It has easy repayment terms – You don’t have to worry about lengthy loan terms that you may not be able to sustain. Simply choose an amount that you actually need, and select a repayment term that you can religiously follow. You can opt for a short-term or long-term startup loan, depending on your needs and financial circumstances.|
- It boosts your credit score – Obtain copies of your credit report from the credit bureaus in Australia. Check your outstanding debts, contest them if needed and pay the defaults using your startup loan. As your debt decreases, your score increases. Potential lenders would also note that you have been your debts responsibly, and it wouldn’t take long before you can access low interest loans.
There are a few essential things to keep in mind when applying for a small business loan:
Check your debt to income ratio
While banks may grant you a higher amount than what traditional financing companies may give, you need to calculate the total amount of money you have borrowed from various credit companies. How many percent of your income would be allotted to your debt repayments? By calculating it, you will be able to determine the amount of money that you can pay each month. Consider your financial situation, make way for emergency expenses and determine to set aside a sum of money for repayment purposes only.
Investment in your company
How much money did you invest into your company? You can get a higher amount of loan when you have invested a substantial amount of money in your business. Aside from your repayment capacity, the lenders look into the level of risk you put into your business and how confident you are to part with a huge sum of money for your cause.
Determine the amount of loan you need to borrow
In the situation above it is not enough that Bob knows the price of the equipment. If it is the only basis off his loan amount, he may not be able to cover all other business expenses. Remember that it is difficult to gain access to funding. The moment you obtain it, use it wisely—not only to pay for immediate business expenses, but to use it as a tool to generate more profits.
Assess the monetary needs of the business
Aside from the equipment, are there other pressing needs that need to be addressed? Can you use a certain portion of the money to increase your income, and reduce your liabilities? Next, find a way to increase your income. Additional capital could mean additional profit. But, if you don’t use your loan wisely, you may end up having the same level of income, but higher level of debts. Many entrepreneurs re-invest a portion of their loan proceeds into a profit-generating vehicle, such as additional raw materials, new sales channel and more man power to boost their ROI.
Decide on the appropriate repayment terms that you can fulfill
Think about your business process. How long does it take to refill your inventory and collect payment from customers? Consider the incoming and outgoing financial transactions. Use your data to determine the amount of money that you can pay on a monthly basis and the exact time that you can gather the money you need repay your loan.
For more information, talk to the experts at ALC Commercial on 1300 886 996.