All About Small Business Loans


Besides the myriad of problems that a small business owner
faces, the most severe issue is lack of capital and limited
avenues to raise capital from external sources. Being a small
business owner, it is never easy to get a business loan, as most
lenders would consider them as borrowers with unstable income
and poor credit. Justifiably, as most small business often do
not have a steady flow of income in the initial period and runs
on low profit, it actually becomes a challenge for the owners to
pay off their business loans. Most financial institutions and
banks are therefore not very enthusiastic about lending to these
small business owners and are concerned about their ability to
repay.

However, the good news is that there is a group of lenders who
would not like to let go this increasing market segment of small
business borrowers and they have devised a lending scheme that
fits the requirements of the small business owners. They can use
these small business loans for expansion of their business,
purchasing new tools and technology or even to meet revenue
expenses like paying wages or buying raw materials.

Apprehensive about the increased risk involved in lending to
small business owners, these lenders would always take
sufficient measures to cover against any probably loss. In most
cases the small business owners would be required to keep an
asset as the security for his borrowed amount. Also, the
interest for small business loans is always charged at a higher
rate than other loans. Unlike normal business loans there is
often a cap to the amount that any financial company would lend
to a small business owner. Depending on the stability of the
business, the credit history and several other factors the
maximum amount of loan offered is decided.

Small business loans can be either for short term (ranging from
few months to an year) or long term, which can be repaid over a
longer period that might stretch even to 20-25 years. The small
business entrepreneurs needs to decide on this repayment period
and other terms and conditions depending on their specific
requirements.

The most important factors that most small business owners
should consider while deciding on a loan is the flexibility of
repayment. As most small business would experience irregular
income for some period in its life cycle, a flexible repayment
schedule can be immensely helpful. There are lenders that offer
extremely flexibility in terms of amount paid towards repayment
as well as any pre specified period of repayment. This helps the
small business owners to make repayments for any particular
period based on their income during that period. As there is no
specific pre determined amount to be paid, there is no question
of underpayment or further interests being applicable. However,
it is very difficult to find such a lender who will be so
sensitive to your financial condition and offer you the highest
degree of flexibility.

Alternative to small business loans there are many other
companies that are offering business cash advance to small
business owners, where they are not liable to repay. Business
cash advance is not a loan and the organization offering this
cash advance gets their money from the credit card sales that
the business does in a specific period, there by reducing the
burden of paying back the loan and the terms and conditions to
qualify for such cash advance are also relatively simple.

With this increasing number of sources available for small
business funding it is high time that you unleash the
entrepreneur in you and give shape to that dream project you
have in your mind.