If you own a business and need money to purchase inventory, fund a project, etc., there are a variety of loan options, two of which are listed below. You will also find reasons you may be turned down for loans that you apply for so you can make the needed chances to get approved.
Two types of business loans include:
Short-Term Business Loan
If you do not need a large amount of money you can choose a short-term business loan. You can get this type of loan through a bank or other types of lending institution. You should understand that in many cases the interest rate for a short-term loan will be higher, which results in higher monthly payments to pay the loan back. You also have to generally pay the loan back within a year or two.
Long-Term Business Loan
If you need a large sum of money, such as to get your business off the ground, to pay off debt, etc., you should consider a long-term business loan. These loans have a much lower interest rate. This means your monthly payment will be less expensive. You also will have a longer term to pay the loan back, such as five years.
Reasons You Will Get Turned Down
There are many reasons you can get turned down for a loan. The first is bad credit history. Contact the three credit reporting agencies and get a free copy of your credit report. Go through it and look for any outstanding debt. Plan to pay off this debt so you can get it off your report. Also, make sure there are no mistakes on the credit report.
Another reason you can get turned down for a loan is that you have a high-risk business. You would be considered a high-risk business if you have a lot of debt, if your sales are not high, if you have a casino or online gambling, and more. You also may get a lot of customer returns.
Having a short credit history can also affect your approval rate. This means if you are young and have no or little credit history you may be turned down. This is because you have not established yet that you are the type of person that pays their bills on time each month.
Visit a few lending institutions to apply for a business loan. There are also a variety of business loan lenders online that can help you.