How To Choose The Best Place For A Business Loan
Although it’s not necessary for all businesses, some will need a business loan at some point in their journey. It might be something you need right away, or it could be something you need later on when you want to expand your business, but no matter when you want it or even what you want it for, the key piece of the puzzle is to find the right lender. With that in mind, keep reading for some useful tips on how to choose the best place for a business loan so you can make the most of the money you get.
Traditional Banks
The first thing that will usually spring to mind when business owners want to borrow money for their business is a traditional bank, and that does make sense - after all, banks deal with money, don’t they? And the fact is that picking a traditional bank isn’t a bad idea, and it’s a good place to start if you’re not sure what else to do. There are definitely benefits to this idea, like having a wide range of products to choose from, being able to get access to large loan amounts if needed, and the fact that if you choose a well-known bank, they’ll have a good reputation and you’ll know you’re not being scammed.
However, as with everything, there are some negative points to consider as well. One is that banks have very strict qualifications that you have to pass, including having a good credit score and strong financial histories. In some cases, you might have had to have been in business for a certain amount of time, or perhaps you’ll need a guarantor. Then there’s the fact that it can take a while to get the funds from a bank, and if you need the money quickly, it might not be any good for you.
Credit Unions
A credit union is different to a bank because it’s owned by its members, and although they’ll offer a lot of the same services as a bank, the real focus is on taking care of the members, rather than making a big profit. That means you’ll usually be able to find lower interest rates at a credit union, and you’ll also get a more personalized services - in other words, you’ll save money and you’ll have an easier process from beginning to end. There’s also generally more flexible lending criteria when you borrow from a credit union, and even if your credit score is low or you’ve not been in business for long, it might still be possible to borrow the money you need.
Of course, you do need to be a member of the credit union to apply for a loan, and there might be some eligibility criteria there, so it’s worth investigating further to find out and be sure before you sign up. Plus, there might be fewer loans to choose from, but if the interest rates are lower and there’s more chance of getting the loan in the first place, that’s not necessarily a bad thing.
Online Lenders
Online lenders are easy to access, and most of the time you can apply for funding without actually having to speak to anyone, which is ideal for a lot of people, especially busy business owners. You’ll also usually get an answer to your application within minutes, sometimes less, and if you’re approved you’ll get your money quickly as well.
There are issues, however, and online lenders often have high interest rates, plus they’ll offer smaller loan amounts. If you don’t need to borrow that much and you intend to pay it back quickly, those things won’t matter so much, but otherwise this might not be the best option.
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