We are often confused between loan and debts. For common people, it may be the same. However, for businesses, it is completely different. See, when an individual want to set up a business and does not have enough money to finance it, he would ask for a loan. On the other hand, a debt is described as borrowing money for any other purposes. Besides, it makes it less embarrassing when you are tagged as someone having ample amounts of loan other than someone who has a lot of debts.
Axis Capital Business Funding
, credit source for small business owners in the United States, had summarized solutions to assist entrepreneurs in acquiring financial assistance to start and maintain a business. This article is centered on loan options and what you need to qualify.
Before getting into the business proper, you should have already considered the following factors:
Time In Business
Personal Credit Scores
Collateral, if you have any to back up the loan
Generally, basic rule in business indicates that the longer you are in the business industry, the more you have collateral in possession and the lower your interest will be. However, this rule does not apply to all especially to start ups.
The financing option
that can be open to you also depends on the urgency of need, the nature of the business, the location and on how you are going to be paid whether through invoices, credit cards, cash or any other means.
Loans are mostly backed up by banks and can allow you to loan between $5 thousand to $5 million. Certain qualifications, however, are required. Minimum business experience should be 2 years in the United States. This rule is stricter to that of developing cities Singapore, Hong Kong, Jakarta, Indonesia and Kuala Lumpur, Malaysia since bank rules follow stricter and detailed protocols. You may also need to create a detailed proposal and feasible report. The process may even last for weeks to month before approval since most bank conduct strenuous reviews, charges or complaints against you or any other loan records.
Credit score is also a vital factor in bank loans. Your digits should not be less than 600. For independent loan companies, however, credit scores is a requirement but no exact cap is being implemented. You can also loan short-term assistance which can be paid back within 2-3 months and borrow up to $250,000. This is most suitable for owners with lower credit scores.