Author: LoanOne

The Pros and Cons of Debt Consolidation

debt consolidation

Is debt consolidation the best move for you? Getting to know the pros and cons may help you to make a better and more informed decision.

An unfortunate fact of life is that personal debt can increase to uncontrollable levels in a short amount of time. One of the best ways of tackling debt is by consolidating your debts into a personal loan. Here are a few things you should consider when applying for such a loan facility.

 

What Is Debt Consolidation?

If you are drowning in debt or are having difficulties paying multiple loans, with each loan having individual interest rates, balances, terms and conditions – it may be prudent for you to consider combining all these debts into one convenient and easy to manage loan. This loan will only require you to make one single monthly loan payment.

debt consolidation by personal loan

However, there are some things you should consider before making a final decision. Here are some pros and cons of debt consolidation that can help make your decision making process easier.

Pros:

One Payment, Instead of Multiple Payments

When you take on a personal loan to consolidate all your credit card debts, plus their respective interest charges, you will only have to make a single payment every week or month over an agreed duration of time. Managing all your credit card debts thus becomes a lot easier and much more convenient.

Fixed Rates and Terms

A personal loan features fixed rates and terms that make sure you stay disciplined and diligent in paying off your debt. However, it is recommended that you only commit to loan terms and conditions that you can meet or you may risk damaging your credit score.

Lower Monthly Payments

Increasing the amount of time you have to pay your debts means you will be required to set aside less money every month towards debt repayment. Lower monthly payments however means that you may end up paying more in the end.

 

Cons

Like any other loan, there are certain downsides. Here are some of the drawbacks of using a personal loan to consolidate your debt:

Potential To Increase Your Debt

By consolidating your debt, you are able to free up credit. However, if don’t do this, you may end up spending more on your loan and thus increase the amount of money you owed to begin with.

Spending More

As highlighted above, a personal loan can help you lower your monthly payments by stretching the repayment duration. However, the stretched repayment period means you end up paying more interest and thus spend more money to repay your debts.

Damaging Your Credit Score

If you fail to be consistent with the monthly payments on your personal loan, you may end up damaging your credit score or even worse, losing it altogether. This can lead to serious financial turmoil.

 

What Should You Do Before Applying For A Personal Loan For Debt Consolidation

get out of debt

1. Shop around and compare the rates and terms of different loan facilities in order to find one that suits you best.

2. Come up with a convenient and practical repayment plan that allows you to make loan payments easily and still cater to your personal and living expenses.

3. Calculate a reasonable repayment term that works best for you so that you do not increase interest rates or increase the risk of paying late fees.

4. Knowing your credit score is instrumental in securing a personal loan.

Taking control of your debt situation as soon as it starts getting out of hand is the best way to secure your financial future and your ability to get future loans, such as a home or car loan.

You can learn more about LoanOne Personal Loans for debt consolidation here. You can apply online now and get a response within minutes.

The Top Benefits Of Business Loans When Expanding Your Business

business loan for business expansion

Are you an entrepreneur who has the ultimate goal of turning your passion into a reality? Are you looking to expand your small to medium-sized business? If you are, you have probably been looking at a number of different business loans to help you achieve your goals. These loans could be from a bank, a government institute or venture capitalists.

Small and medium-sized businesses are constantly in need of funding to achieve their expansion needs. Funds are also needed to meet working capital needs and to make use of business opportunities. Business loans can offer the optimal solution for these financial needs. These loans carry many other advantages that you also need to be aware of, particularly if you are looking to expand your business. Of course, you will need to assess which lenders you should be looking at to ensure that you get the business loan that you need.

 

Helping With Cash Flow

You can use a business loan to boost your revenue or to gain a competitive edge over the competition. Any money that is coming into your business is good money, especially if you are using it correctly and efficiently. With these loans, you can look at short or long-term financing and choose the size of the loan that you want. The idea is that you will be using the income generated from the use of the funds to repay the loan and keep a bit of profit. This allows you to achieve your goals without having to spend any of your own cash.

A bank will generally be the first choice when it comes to applying for these loans. The advantages of banks are the familiarity people have with them and the accessibility for long-term customers. However, it is important to note that it can be tough to get your loan approved. However, you will generally have lower interest rates when compared to other lending options. You also do not have to worry about parting with profits or ownership of your business as you would with investors and venture capitalists.

 

A Simple And Speedy Loan Disbursal Process

There are a lot of FinTech companies that are focusing on the demand for funding from start-ups and small businesses. Government support for these ventures is positive and this has created a market for funding these businesses. Digital lending platforms have tapped into this demand and provide business loans that work for both the lender and the borrower.

The loan process with these FinTech providers will generally be simple, friendly and hassle-free. There are many of these companies that you can choose to work with and the process of applying will be similar. You will generally have to fill out an online application on their website and submit this. Once the loan has been approved, the loan will be distributed in a matter of days.

ALSO READ: Find Out About Your Business Loan Options

 

A Customised Solution

business loan

A business loan is able to give your company the ultimate boost in one of the most effective and efficient ways. Many of the business loan providers believe that every business is unique and will provide a range of tailor-made and flexible loan products to cater to this. This means that you should be able to find a loan solution that works for your business and will meet your requirements.

The repayment options will also be flexible when it comes to certain business loans. Providers will generally tailor your repayment schedule to your financial needs. This flexibility has been designed to cater to the needs of a small to medium-sized business. You can also take a loan against your receivables which can be paid back in a single installment upon maturity.

 

The Competitive Interest Rates

As the demand for business loans increases, the competition in the market will also increase. This will result in more lending companies offering competitive interest rates. To sweeten the deal, they will often have nominal processing fees and no hidden charges. These offers will make them more appealing to small businesses and start-ups.

 

Collateral Free Finance

A business loan can provide the financial support that your business needs. There are many loan providers that understand this and will work like a partner for your business and help support you to ensure you are able to fulfill your goals. This is why you can get collateral free finance from many providers which allow you to get a loan without committing any of your assets.

In order to qualify for these loans, your business will be assessed based on the strength of the cash flow and your receivables. You will generally need to have been in business for at least a year before you are able to access these types of loans. Newer businesses will have a harder time applying for these loans as they do not have a strong business history for the loan assessment.

There are also very few traditional lenders who are willing to embrace new ideas with open arms. This is why you should consider new-age lenders if you are going to be looking for a business loan as these lenders are more willing to invest in newer ideas. There are a number of new-age loan providers that you will be able to work with which offer you the financing that traditional lenders will not. These FinTech companies will generally focus on lending to start-ups and small businesses.

How To Apply And Qualify For A Business Loan

qualify for a business loan

If you are looking for financing, you need to choose the right loans that will allow you to increase your chances of getting an approval. When applying for a business loan, you need to prepare a detailed business plan and inform the lender about your proposal. That way, the lender can advise you on the right financing option for your circumstances. Here are some useful tips to help you apply and qualify for a business loan.

 

Making Decisions

The first step is deciding whether or not your business needs the loan. Other factors you need to consider before approaching a potential lender include the following.

a) How much money do you need to borrow to meet your business objectives?

b) What type of loan is sufficient enough for your financial requirements?

c) What’s the longest time you need the loan for your business?

d) Can you afford to repay the loan with your business, as well as the interest or any other ongoing fees associated with the loan?

e) What type of security can you offer the lender and how will it affect the overall interest rate for the loan?

 

1. Loan Access

Here you need to determine how often you can access the funds borrowed through the loan. There are a few options available to you.

a) At Call Loans – These include line of credit or overdrafts. They are available to you whenever you need to access the money. For instance, if you need semi-regular access to assist with your business cash flow or keep your business operating when waiting for customers to make payments, you can access these loans effortlessly.

b) Upfront Loans – These are also referred to as fully a drawn advance. Here, you are provided with the full loan amount. Therefore, you have enough money whenever you need to buy a new business from scratch or buy new equipment for expansion purposes.

 

2. Choosing The Right Loan Terms

choosing business loans

Here, you need to determine the right loan repayment terms that don’t affect the overall flow of your business. With the ‘at call loans’ there are no fixed terms. On the other hand, with the ‘upfront loans’ you need to pay the loan plus interest in regular portions.

The full repayment amount depends on the length or term of the loan. You need to determine the right loan term for your business by calculating how much money you can afford for servicing the loan. Keep in mind that taking a loan with a long term results in more interest during the term of the loan.

 

3. Total Amount Of Ongoing Funding Required.

This refers to the total amount required for the overdraft or line of credit to be utilized by the business at any one time. For instance, you may have an overdraft limit of $20,000 for the occasional big expenses that come in. However, you will not use more than $5,000 on average. That means that the ongoing funding you need would be $5,000 and not the $20,000.

When applying for the overdraft limit, there are a few things to consider. First, with a high overdraft amount, you will pay more fees. Also, there might be a few clauses in the contract where the lender can force you to repay the entire loan at any time.

 

4. The Best Interest Repayment Options

interest rates

What’s better a variable or fixed interest rate? There are a few things that will affect the interest rate such as the repayment stability, the overall cost of repaying the loan as well as the available loan features. However, the choice between the two interest rate options depends on how much business cash flow is present once you have paid all your expenses, including your loans.

However, with a fixed interest rate, the lender bears the risk of any increases or decreases in the interest rate. On the other hand, with a variable rate, you will bear any movement of the interest rate whether up or down. Keep in mind that if your business is not generating too much profit, a variable interest rate will generally increase beyond your repayment capability.

 

5. Choosing The Right Loan Security

You can choose to have your business loan either secured or unsecured by utilising different types of assets such as rural property, residential, business or commercial property. If you choose an unsecured loan, you should expect a higher interest rate, and the same goes for securing a loan with an asset of lower value. Keep in mind that if you don’t make the loan repayments on time, the lender can seize the asset or property offered as security.

ALSO READ: Find Out About Your Business Loan Options

 

6. Loan Fees

Any loan is going to come with fees that will make it less attractive. Some of the common loan fees to expect include the following:

a) One off fees including application or establishment fees

b) Discharge or exit fees

c) Fees for early termination

d) Regular fees such as line/credit advances or service fees

Find out the fees associated with the loan before applying for it.

 

Advice When Applying For A Business Loan

You should seek advice from your business advisers or an accountant before approaching a lender for a loan.

Before approving a loan, lenders will require in-depth financial history about your business so you should have that information readily available. Create a convincing and fully detailed business plan with a profit and loss statement as well as a cash flow forecast.

The lender needs the information from your business plan to assess things such as the past and future plans or objectives, the people working in the business and the market itself.

 

The Risk Assessment Process

When considering your loan application, banks and other financial lenders will assess any business risk present. They might look for:

a) The nature and level of your security. This is what you are offering to them as a guarantee in the event that you can’t afford to repay the loan.

b) Your cash flow risk which is the ability for you to make regular repayments for the loan.

c) The business risk which is the ability to finally pay the debt including any others you might have.

The lender needs a projection of the cash requirements for the business to determine whether the actual cash left after any expenses can repay the loan and also to ascertain whether or not you’re an effective manager. There are a few things that determine a lender’s perception of risk. These include:

a) Lack of security

b) Lack of business history

c) Start-up businesses that incorporate business, financial and management risk.

d) Industry sector where there might be too much competition, poor profitability profile, barriers to entry and current economic issues.

e) Highly seasonal niches such as agriculture or swimwear where you need to show how to handle cash flow issues on the off-season.

f) Poor credit reports

g) Lack of finance skills, market knowledge and poor planning

If you have a tax debt, you should exercise caution. A lender might not approve the loan if you are currently in a payment arrangement. Therefore, you should discuss the repercussions of such a payment arrangement with your future lenders before getting into one.

Find Out About Your Business Loan Options

commercial loan options

Many business owners feel overwhelmed when they are choosing the best way to get their business growing or even sustaining performance. We will step through some business loan options to help you understand the benefits of using business loan for your business & things to avoid.

If your business is considering using a business loan to finance equipment, purchase IT, office furniture, property or even vehicles you need to consider the different finance options available to your business. This information will enable you to be more equipped to come up with a decision that will fuel the growth of your business.

If you don’t have enough cash on hand to purchase new equipment in full, then you’re definitely not alone. Most businesses at some stage in their journey will need to make decisions around how to grow, when to invest & will need to leverage a business loan.

For instance, running a delivery business doesn’t mean you have to invest a ton of cash to buy several vans. You can use a business loan to finance the purchase of vans and start operating your business sooner than you’d think. By using these loans, your business is given the opportunity to use the vans right away in exchange for making regular payments instead of paying the full cost of each unit.

 

Preparing to Get a Business Loan

When applying for a business loan, it’s essential to prepare a detailed business loan plan & outline the strategy around the way you intend on using the funds & how it will help you grow your business.

Providing a detailed plan with specific information will help advise your business with right type of business loan & payment terms.

When you have invested time & come to the conclusion that your business needs a loan you then need to identify factors to consider that make up this business loan plan:

  • What type of business loan do you need?
  • How much does your business need to borrow?
  • What payback period are you looking at?
  • How much interest will you be paying in total?
  • What kind of security will the lender require?
  • Is the borrowed funds going to add income to your business?

In most scenarios businesses will only consider a business loan when they are planning on growing their business or provide the tools, machinery to get the job done more efficiently for their team. If this sounds like you, great. It means that your business is growing and needing more resources to generate more revenue which will then mean servicing your business loan will be easy.

ALSO READ: 8 Mistakes You Should Avoid When You Get A Small Business Loan

 

Managing Your Cash Flow

business loan options

It’s imperative to understand the implications of securing a business loan as far as cash flow is concerned. Working with an accountant to prepare your cash flow forecast helps you see how the different financing options benefit & impact your bottom line.

Seasonal cash flow variations, for instance, requires the careful structuring of your business loan repayments to make sure that you can make timely payments and avoid hefty penalties.

You should also understand how and when your new equipment, vehicles will generate income for your business which be accounted for when looking for a suitable business loan. This includes assessing the productive life of the newly purchased, systems, equipment in addition to associated costs such as maintenance and repairs. Through this, you can avoid paying for the equipment when it’s already beyond its productive life or when it doesn’t do anything other than hurt your cash flow.

Seeking professional assistance from your accountant and a LoanOne Lending Specialist will guide you as you navigate all of these cash flow considerations and pick what equipment finance solution best fits your business needs and budget.

4 Simple Ways To Repay A Personal Loan Sooner

4 Simple Ways To Repay A Personal Loan Sooner

Personal loans often come in handy when you are making a big purchase. However, you need to carefully plan your repayments & consider the interest being charged. If you schedule to make more frequent payments you could be in a position to pay your loan off faster. Here are a few tips to help you pay your loan faster.

 

1. Make Payments Every Fortnight or Week

If you have a personal loan or considering getting a personal loan for a car, bills or a holiday you may be aware that a lot of lenders set up repayment structures on a monthly basis. It may be in your best interests (pardon the pun) to restructure your payment cycle from a monthly payment to fortnightly. By converting to a fortnightly payment cycle it will mean you end up making more payments throughout the year without actually spending more.

Example below:

$1,000 x 12 monthly payments = $12,000
$500 x 26 fortnightly payments = $13,000

In this example there is an additional $1,000 being paid off your personal loan & there are additional interest savings to be made in some instances based on the interest accrual.

 

2. Make Extra Repayments

If you want to payout your full personal loan amount sooner, you should consider making additional loan repayments. When you make additional repayments it may not feel like a great deal each pay however when interest is calculated on a daily basis and you reduce the amount of payments you in total.

ALSO READ: Guide To Taking Out Personal Loans

 

3. Refinancing

refinancing

If you are paying high ongoing fees & interest, you will find it difficult to pay your loan out quickly. There are a few ways to reduce the costs and speed up the payback period of your personal loan. You can do this by refinancing your personal loan to take advantage of lower charges and fees.

Bear in mind you still need to repay the original amount in order to make sure you repay the loan sooner. On the other hand, you could also choose to refinance the original loan into a home loan. That way, you will secure a lower interest rate which allows you to pay off your personal loan in a much faster time frame. However, you still should aim to repay your personal loan amount first and foremost to make sure the refinanced debt reduces faster instead of being part of your mortgage for the next 25-30 years.

 

4. Reducing Debt

Reducing your debt, or opting to pay your loan out sooner than the loan term, is a good option to consider. However, you need to confirm if there are any penalty fees applicable. Most personal loans issued by the large banks allow you to make additional payments without adding any penalties. However, you should check first so you avoid any surprises or hidden fees later on.

Try one or more of the methods outlined above to repay your personal loan sooner. Eventually, you could save a lot of money on the interest payments and take another personal loan if need be. If possible, write a financial diary to keep track of the payments to make sure everything is done on time and effortlessly.

Advantages of Online Loans

business loan online

Online loans have become more and more popular, and there is a reason why. There are many benefits you can expect to get from online loans. Many people today do their shopping online, invest money online, and even book an appointment online. The same case applies to loans. Here are some advantages of online cash loans.

 

Convenience

When applying for an online loan, you don’t have to leave your home, you can do it from the comfort of your home without moving an inch. As long as you have your budget to hand, then you will find that the application forms are easy to fill in. It will not take you much time to apply for the loan, although you need to take some time in considering whether you need the loan.

 

Privacy

There is no need of worrying that your friends and family will see you applying for the loan. People usually want their financial matters to be kept private. If you are one of them, then you will find it easier applying from the privacy of your home. You won’t be seen getting into a loan shop or waiting in line at a loan shop or bank.

 

24/7 Applications

There are no worries with time because you can apply any day and any time you want. You can even send the application on a bank holiday. This is because websites do not have an opening and closing hours, making it a great option. You should keep in mind that the applications might not be immediately processed. Check the processing times of the lender before you apply.

 

Extra security

The online loan application will provide you with security. You can know whether the lender is approved. There are some doorstep lenders who turn out to be loan sharks. Loan sharks are looking for ways to prey on the desperate and vulnerable. You will also have not to worry online because the data is securely stored.

 

Comparison options

When you go to a bank or loan shop, you will just be asking money from one lender. Doing online will give you the freedom to choose from different lenders and products. There are payday loan comparison sites you can use. You can also compare the loan types. Another option you can get online is peer to peer lending.

 

Latest technologies

You will be able to take full advantage of the latest technological developments when you are applying for online loans. There are some online lenders who will link to your online banking, which makes it much easier for you. You can manage to avoid extra fees and charges when you link to your online banking. The lenders will be provided with read-only access so they can check your statement without changing anything.

business startup loan

 

Personalized lending decisions

Complex computer algorithms can use your details to make decisions, and this makes the decisions more personalized. If the application is approved, then it will have passed the assessments. If the application is declined, then there will be a good reason for it. Numbers and figures will be used to make the decision when you apply for a loan in person. There are many factors that are considered when you apply for the loan online.

 

Speed

When applying for a loan in person, you might find yourself having to book an appointment and waiting in a queue. There is also having to go to the bank or loan shop. Online applications are faster because you just need to go online. You can expect to get your money in the shortest time possible when you apply for an online loan.

 

Unsecured debt

Online loans are normally unsecured debt. You don’t have to put up your belongings as collateral. Other lenders might ask you for to provide a collateral such as your car or property for them to give you the loan. Your possessions will not be at risk when you choose online loans.

 

Easy to keep track

You will be able to track your online borrowing more easily. You will be able to see how much debt you have and the payment dates. You can also get an SMS or email to remind you so that you don’t miss on repaying the debt on time.

Online loans will prove to be a great option the next time you need some money.

The Benefits Of Applying For Cash Loans

Cash Loans | LoanOne

If you are in need of money fast, then cash loans are a great way of getting the finances you need when you need them. However, it is vital that you never take out a loan to spend the money on unnecessary items as that’s how the debt cycle begins. Instead, go for a loan when it is the only option there is for your situation.

With that being said, cash loans can be quite beneficial if you are in a tight spot. Here is a look at why you should consider getting a cash loan.

 

1. They Are Easy To Apply

Applying for cash loans is simple, and qualifying for one is just as easy, but that is if you find the right lender. Most lenders only require that you fill out an online application form stating your monthly income and basic personal information. Once you have done that, you will be notified if you qualify or not within 24 hours. The good thing is that most cash loan lenders only require that you have a steady monthly income and a clean record when it comes to paying off bills.

 

2. Swift Processing of Applications

Receiving a cash loan is often a fast process with most lenders approving loan applications within 24-hours. The fact that you can receive the money you need within a single day makes cash loans the most ideal option for situations where you need money immediately. Other lines of credit like applying for a bank loan or credit card often take longer to process, meaning that by the time you get the finances you need, it could be too late to take care of an emergency expense.

 

3. They Are Approved Based On What You Earn

If you are worried that you won’t be able to pay back the loan on time, then you will be happy to know that you’re only able to borrow what your lender thinks you’ll be able to pay back comfortably. Their lending decision is often determined by your monthly income and the debt or bills you are paying off. Most lenders will only let you borrow what they think you can pay off comfortably without adding to your cycle of debt as would be the case if you took on a loan that’s too big for you to afford.

fast cash loans

 

4. High Approval Rates

The approval rate for cash loans is much higher compared to those of other lines of credit. Income has a very broad definition and this allows makes it possible for almost anyone to get approved for a loan. While the factors that lenders will consider to approve one for a loan defer, one thing that remains constant is that most, if not all of them will consider if you have a steady monthly income. Unlike with other lines of credit, the loan amount you get is directly connected to your monthly income. It is because of this that lenders feel comfortable giving out loans as they know that borrowers won’t have a problem paying back their loans within the set period.

 

5. You Spend Your Cash Loan However You Like

Once you have been approved for a loan, there are no limitations or restrictions on what or where you spend the money. However, it is advisable that you never take out a cash loan unless it is absolutely necessary. Cash loans are best for unexpected expenses that need immediate attention or else you will find yourself deep in debts you cannot handle. Only spend borrowed money on emergency expenses and never on recreational use.

 

6. No Collateral Required

The great thing about cash loans is that they don’t require you to give up anything in return for finances. Some lenders may require that you temporarily give up ownership of some of your assets like your car until you’ve finished paying back the loan. However, most lenders do not require that you do so. Most lenders will use the credit info you provided during loan application, and a carefully-managed budget to determine if you qualify to get the amount you requested and are, therefore, comfortable lending without requiring collateral.

If you are in need of a quick cash bailout, then cash loans are a great way to get the finances you need. Just make sure that you understand the requirements of getting one and that you have the means to pay off the loan in good time.

8 Mistakes You Should Avoid When You Get A Small Business Loan

mistakes to avoid when making a business loan

Australia currently has a great economy and a low official cash rate and this encourages businesses and consumers to have confidence in the economy. If for this reason, you are considering getting a business loan, then there are some traps that you will want to avoid. Here are eight mistakes business owners sometimes make that can cause them to pay more for financing, make it difficult to get the funds exactly when you need them, and that can lock in the loan with a longer payback period than is needed.

1. Lack Of Preparation

business loan

There will be a lot of background information you will be required to supply when applying for a loan. Your Banker will want to see your cash flow projections, a detailed business plan, and your financial records before they can consider what loan you qualify for.

2. Not Getting Professional Advice

The overall cost of your business loan will be determined in large part by how you structure the small business loan with regard to the tax savings you’ll have or not have. It’s only when you get the professional advice you need that you’ll have what you need to choose the right financing for your business.

ALSO READ: How to Get Your Small Business Loan Approved?

 

3. Getting The Wrong Terms For Your Needs

Anytime you’re getting a loan it’s important that you match its terms together with the specific purpose you’re getting the loan for. Anytime there is a mismatch between these two it reduces the amount of flexibility you have. One example would be to get longer financing on a large purchase of property and use it for some short-term needs such as cushioning seasonal fluctuations.

4. Going To The Wrong Lender

It’s easy to waste time by going to the wrong lender and then being rejected, which in some cases can even have a negative effect on your credit rating. Some lenders simply may not understand your type of business and this means you need to find one that does and that is comfortable with making a loan for your type of company.

5. Choosing The Wrong Type Of Finance

business loan advice

For most loans, there are a variety of choices in the types that are available and these include your typical secured loans to highly specialised financing for specific industries. Each of these choices has their pros and cons and that makes it necessary for you to take the time to shop around and find which one is the most suitable for your specific purposes.

6. Failing To Understand The Use Of Collateral

Lending institutions are in the business of profiting from loans and the cost to you is dependent on the amount of risk the lender is taking. Very often a lending institution will reduce cost when you secure the loan with appropriate collateral. This is true whether you’re dealing with a traditional bank or an alternative lender. You also want to compare the loans using personal residential security versus company commercial security. There are some serious considerations whenever using your home as security for a business loan.

7. Underestimating Total Cost

Anytime you secure a loan it will come with a cost that includes set up and discharge fees and administration fees. You will want to understand exactly what your total costs are because they are typically added to the total of your loan balance and you’ll be paying interest on those charges as well. Small businesses are very important to Australia’s economy and to keep them running requires specialised support from those institutions.

8. Over Paying

If you take your time and do the necessary homework you will be able to achieve a suitable outcome. The little bit of extra time can often make the difference between a loan that has flexibility and lower cost and one that is inflexible and comes at a steep price. Small business owners are operating at a good time in Australia and when they take the time to get the right loan it can help them improve and grow.

How Can a Small Business Loan Benefit My Business

business startup loan

You don’t need to have a finance degree to see that the economy today is tough. The unemployment rates remain at an all-time high, and there are many companies that have been forced to file for bankruptcy, while many are hanging by a thin thread. Today’s economic climate is characterised by a lot of changes and often the only option for getting funds is going for a business loan. Any business can experience immediate growth with an efficient business loan, as long as they wisely use the additional capital they have.

Reasons for Business Loan

There are many reasons why businesses take out a business loan. Maybe the company is interested in securing financing to maintain their operations, investing in equipment, starting a new branch, and many other reasons. These loans are beneficial to a business and they are not hard to get because there are a lot of lenders out there ready to partner with business owners who have a credit score of 720 or higher, a good business plan, and stable income.

Benefits

One of the biggest benefits companies can expect to get when they decide to get a business loan is the fact that the company will be increasing their working capital. While it is easier for large companies to expand because they have the money needed to grow larger, but the loan will help in maintaining cash flow for their operations, which makes it much easier to pay for unexpected expenses. This means they will have the ability to make their payments using the income they gained after they expanded the business.

The next benefit is when lent to a corporate entity, the business owner will not have to pay it back in case the company fails. If the company fails, the business will be liquidated, then the money will be used in paying back part of the funds they owed (sometimes all). This is what many business owners have in mind when they decide to apply for a business loan because it means that if there is a loan default by the corporation, it will not affect them personally.

One big advantage of getting a business loan in the current business climate is the fact that they come with very low interest rates. This is because the liquidity of the banks has continued to increase after the recession, and this has also made the banks lend out at an increasing rate, and the interest rates might soon start to rise in order to compensate. Taking out a large loan now or the near future will mean lower overhead when compared to the one taken after two years, making it the prime time to plan your expansion.

Before contacting a lender, a business owner needs to first evaluate all their wants and needs. This will give them the chance to see the right type of lender for their business. It is also important that business owners take some time to go through the terms and conditions. There are early repayment penalties that come with the loan, and it is a good idea to get a loan that will not have these penalties because paying the loan in full can help save the business a lot of money in interests.

What to Watch Out For

terms and conditions business loan

There are some things you will need to look out for when deciding to take a business loan. When you get the different options from your liaison at the bank, make sure you go through the terms and understand them. If you don’t, then ask them so they can explain until you do. You should never enter an agreement until you have a clear understanding of it; how the interest rates are calculated (and how often), the frequency and flexibility, penalties that will come with missing a deadline, the kind of customer service you are expecting, and whether there is a room of renegotiation of the terms in the future are all the important points you will need to understand. You should always keep in mind that it is not only your current bank that is willing to lend. Check other lenders and see their ability to offer a loan that meets your specifications before you can make up your mind. Employing a little caution and patience will help you avoid negative and unforeseen consequences that might come up.

ALSO READ: How to Choose the Right Small Business Loan – Same Day Loans?

Is a Loan Right For You

A loan has some drawbacks, but it is important for business owners to keep in mind the many advantages they can expect to get. Business expansion in the current economic climate means achieving far much greater success once the economy bounces back, and the increase in liquidity will help a business until they can stand on their own again. The most important thing you will need to keep in mind when considering a business loan is shopping around for the best rates and partnering with a lender you can trust. If you can get the right rates, payments, and able to pay the full amount at once, then going for a business loan might be what is needed to take the business to another level.

Business Loan for Startups: How to Get a Startup Business Loan

business startup

Business start-up loans are among the most applied for business loans today. Although many people and businesses may be applying for these loans, very few business start-up loans get approved.

Among other reasons, one of the most significant challenges these start-ups face is lack of a trading history. The inability to prove regular cash flow can be a reason why lenders don’t get back to you or approve your loan requests. Banks and lenders always view individuals without consistent cash flow, or records to prove it, a risk, which is why they are hesitant to approve larger loans. This makes it almost impossible for an aspiring entrepreneur get financing from these institutions.

cash flow

The only way lenders can reduce the risk of loan defaulting is by looking into your books and evaluating the business’ capability to repay back the loan. Although some business proposals may be hard to resist, lenders will at times need security for the amount applied for. This could be in the form of assets or a guarantor.

Some of the options you might have include:

1. Credit Cards

Almost everyone today has a credit card. Credit cards make it possible for you to have access to funds whenever you need them. Although credit cards were initially designed to help finance personal issues, you can still use it to pay for small business start-up expenses such as website setup, company registration and such. You however need to plan carefully when using these to fund a business project. Nevertheless, you can push the credit to your company, then pull the money from the business once it starts earning profits.

2. Personal Loans

personal loan

LoanOne – Fast, affordable and hassle-free online cash loans | Apply for a Personal Loan now!

You can use a personal loan to finance a business start-up. You can either apply for a personal loan from LoanOne or your bank. The best thing about personal loans is that they give you access to larger amounts of money, unlike credit cards. Proper planning is also needed when using the loan to get the business going. For instance, you can use the personal loan to register the business as well as get other things going. You can then, later on, start repaying the personal loan using income generated by the business. Getting a traditional bank approve a business loan is way harder than having them approve a personal loan request.

3. Crowdfunding

Although relatively new, crowdfunding provides a way to generate capital for a business idea. It generally involves having friends, family, and well-wishers (or even investors) contributing to your business idea. You however need a platform (such as kickstarter.com) to post the business idea and ask pledges from friends and anyone else that might be interested. Some form of marketing is however needed to get more people know about the idea and help you raise funds.

4. Micro Business Loans

Micro business loans provide fast and easy ways to access business funding of loans up to $50,000. Lenders, such as LoanOne, will however need assurance that you can repay the loan. Some of the requirements include proof of ownership of a car, house, or another asset. You also need a clean credit history for the loan to be approved.

5. Property Assets

Anyone with available equity in commercial or residential properties has a broader net to cast when looking for a business start-up loan. Most lenders will approve loans of up to 80% of the property value. You may however be lucky to find a lender willing to give loans totalling the value of your property. This however only happens if the business shows signs of bringing in more returns and profits at the end of the day.

6. Equipment Finance

Purchasing new equipment for a start-up company can be a huge investment for the business. Many start-ups find it easier making the purchases from a loan. Most lenders will however only be able to approve equipment loans of up to $30,000. You’ll however need a clean credit score and a sound repayment plan for the loan to get a nod. Getting equipment financing is also relatively easy as lenders see it as an investment and security as well. Buying equipment worth more than the amount mentioned above will however attract strict evaluation of your business trading history.

These are just but a few of the funding options you can use for your start-up. You can start off with these options, then go for a business loan if the business is already registered and running.