Business Credit Cards & Business Loans

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Business Loans for Startup & Expansion

Business Loans for Starting a Business

Starting the business is the hardest barrier to overcome in the entire business cycle. Lack of confidence, lack of experience, and lack of control are just some of the uncertainties that small business owner face prior to the deployment date.

According to Dun & Bradstreet, the largest credit reporting agency, most businesses fail in the first 3 years. The primary reason is not any of the uncertainties listed above – it is the lack of funding. Most fail to properly fund the business. That issue has a deeper origin. Using savings or SBA loans business owners start a business but that alone is not enough. To stay afloat the small business owner must start out building strong business credit, or at least start out using the business credit established day one.

Business Loans for Expansion

If you already have a well-established business with a good track record and are in need of a loan for expansion or any other reason, you will want to avoid using personal credit to secure that loan and, instead, use the business and its credit as collateral. This is a good idea for several reasons. Number one, if your personal credit isn’t as good as it could be, using your business as collateral could give you a much better chance of being approved for a loan, or a better chance at being approved for a loan for a higher amount.

In addition, establishing and building a good corporate credit history in this manner will help your business in the long-run. However, if you use your business credit to apply for a loan and cannot repay it, it will reflect upon your business credit, leaving your personal credit unharmed. Therefore, it’s a good idea to use the business as collateral rather than your personal credit whether your personal credit history is good or bad – either to protect your good personal credit, or to improve your chances of being improved for a loan if your personal credit is bad.

Who Will Lend You Money?

Hard money loans are essentially loans that are offered by private lenders instead of banks and other financial entities. The people and organizations that offer these loans are referred to as hard-money lenders. Hard-money loans are typically offered to borrowers who do not qualify for traditional mortgages and financing through banks and financial institutions. They may also be employed by people or businesses that are looking to close quickly or are unable to provide sufficient income tax information. They are generally more willing to take on risks, but typically charge higher interest rates than traditional mortgages.

Adavantages of a Hard Money Business Loan

Some of the advantages of taking a hard money loan include the ability to negotiate the interest rate and other terms and conditions more easily than with a financial institution. You also save money on title insurance premiums and legal fees normally charged by traditional lenders. In addition, the closing time is generally shorter because the borrower does not have to wait for mortgage approvals.

The sources of commercial hard-money loans are usually private individuals, mortgage companies, federal banks and SBA lenders. Each individual lender has its own benefits and downfalls, so you may want to ensure you research as many different lenders as possible before making your final decision. Investing website, reiclub.com, provides a listing of several dozen hard-money lenders.

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