Often, starting a business of their own is something people have thought about for years. The lucky ones save enough to make a go of it by themselves without any help, but the vast majority have to obtain a start-up business loan if they want to make their dream a reality. There are lots of loan options out there, and many factors could mean the difference between an expensive loan and the perfect loan for you.
Risk Versus Reward
It’s easy to think that every loan from every bank is the same, but that’s not true. A bank is a business, and it wants you to succeed because then it will get its money back with interest. Your challenge is convincing one that you’re going to succeed. This is a bank’s risk, taking a leap of faith that you’ll be successful enough to pay back your loan. Factors such as your credit score, business plan, etc. will convince them to either give you a loan or deny your application. Even with the best of intentions, unless you can tip the scales of risk in your favor, it won’t be easy to sway a bank to give you money.
Consequences of Risk
The risk associated with your loan is what determines its cost to you in the long run. High risk factors can not only keep you from receiving a loan but can also cause you to have higher interest rates, a balloon payment at the end of the term, or a higher down payment. If a bank denies your loan, then you may go after payday loans, high-interest cash advances, and other avenues that will cost you much more.
Finding an Affordable Loan
There are ways for you to lower your risk and find a loan that you can afford, but it takes effort.
- Shop Around – Different banks have different rules when it comes to loans. One bank may give you a lower interest rate while another may require a lower down payment.
- Improve your Credit Score – The higher your credit score, the less risk you are as a borrower. If your credit score is low, then pay your bills on time and work to better it.
- Try for an SBA Loan – A Small Business Administration (SBA) loan is backed by the SBA, so a bank knows that no matter what it will get its money back. You still have to qualify for the loan, though, so be sure to do your homework.
Find your perfect loan today. Call us at 888-788-6456 or fill out our online form to start the funding process.