In an economic recession, small business loans can help get people motivated to start a business. Without adequate funding, it will be impossible to start a business that can compete with other competitors in the industry. The loan will provide the necessary funding for purchasing new equipment and expanding the business. The following are 6 benefits of small business loans.
1. Provide Fast Capital Availability to Startup a Business
Small business financing makes it possible for instant capital availability. It is hard to save up the money to start the business of your dreams. However, getting a business loan can make your dream come true. You simply need to meet their requirements including time in business, annual revenue, and credit score. Usually, the loan is approved for businesses that have been around for 1 – 2 years. The lender may also have requirements on the approved industry. You should possess a credit score of 650 and above to qualify for a small business loan.
3. Business Loans Have Low-Interest Rates
Business loans have very good interest rates. The rate you get can be better than the rate of the personal loan. Besides, the interest will also be eligible for a tax deduction. You need to personally ask the respective authority whether the interest is tax-deductible. On average, small business loans have an interest rate of 3%-7%. Many small business loans that are backed by the Small Business Administration (SBA) have a low-interest rate.
3. Bank Doesn’t Interfere with How You Use the Loan
The bank does not interfere with how the fund in your business loan is spent. You run your own business and you spend the fund in the business loan in the way you want. It is much better than working with an investor. In this case, you are expected to spend the money in a way that pleases your investor. Therefore, getting a small business loan is the best option if you want to have total control over your business operation and expansion.
4. Easy and Straightforward Application Process
Applying for small business loans online is a straightforward process. The application for a small business loan is easy to understand. There are a few pieces of information you need to provide when filling out the small business loan application including social security number, business tax ID, bank statement, and financial statement. Often, when you apply online, you will get an answer to your application within one hour. Funds can get deposited into your account within 1 – 2 hours after approval.
5. You Get to Keep All the Profits
Many small businesses take out loans with the purpose of expanding them and bringing in more income. With a small business loan, you own all the profits you make. You don’t have to share it with other investors. The amount of profits you earn is a reflection of how well your business is performing. The amount of money you need to pay back to the bank is fixed regardless of whether you have brought in small or big profits.
6. Bank Can Arrange a Convenient Repayment Plan
The lender may offer a convenient repayment plan for the small business loan. You can discuss with the bank about your situation and they can plan accordingly. They can come up with a repayment plan that suits your cash flow. It will make it easier for you to manage your finances while trying to grow your business. Borrowers have the option to increase or decrease EMI based on the financial condition.