If you’re dreaming of starting your own small business but you don’t have the startup capital, then a personal loan may be necessary.
Although the lending process can be tricky, there are plenty of tips for finding and securing the right loan.
With small business success in mind, here are a number of tips for acquiring a personal loan:
Small Business in the U.S.
Starting a small business can be one of the most rewarding accomplishments you’ll ever experience. With that said, there are a growing number of small businesses that open in the U.S. each year.
According to the U.S. Small Business Association, 630,000 new small businesses open each year nationwide.
As a result, there are more than 28 million small businesses in the United States, which account for 54% of all domestic sales.
In addition, small businesses make up 55% of jobs in America and add more than 65% of all new jobs to the country’s employment landscape each year.
With numbers like this, there’s never been a better time to start a small business than right now. The following personal loan tips will help you with your small business startup endeavors.
Double Check Your Budget
Before you begin looking for personal loans, you need to first make sure what you can afford.
Personal loans come with different interest rates and repayment plans. By calculating what you can afford each month, you’ll avoid taking on a loan that’s out of your budget.
As the following article looks at, along with the 6 tips for getting your personal loan approved, you should also include pre-budgeting to your loan checklist.
Getting your loan approved is only half the battle – the real challenge comes with making your loan payments while your business grows.
So, build a budget and double check it against all loan options.
Search for the Right Lender
There are many personal loan options available, especially if you’re searching for a loan for your small business. If you want to increase your chances of being approved for a personal loan, then you need to search for a lender that best meets your needs.
Going to your bank is a popular lending route, but banks usually have strict underwriting guidelines that aren’t always beneficial for startups.
Fortunately, there are a growing number of private lenders that offer more flexible loan terms. Perform an Internet search and get an idea of your options before committing to a lender.
Consider the Type of Loan
There are two main types of personal loans: secured and unsecured.
The type of loan you choose can affect the approval process and the payment structure. Unsecured loans have higher interest rates because the lender is taking a larger risk.
If possible, try to offer some collateral as a way to secure your loan and lock in lower rates.
Personal loans require a great deal of paperwork on your end.
When lenders see that you’re prepared with all the necessary documentation, they’ll be more likely to process and approve your loan.
So, make sure you have all the required documents ready to submit, including your loan application, financial statements, tax forms, and anything else the lender needs.
By keeping the personal loan pointers above in mind, you’ll be well on your way to starting a small business.
About the Author: Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including small business budgeting and lending.