Doing business is amazing and teaches you a lot of lessons. It is a journey full of surprises. Your reasons to start a business and financial stats does not matter. Be ready to face situations that you never expect. A small business loan is one of them. If you want to start a business then you must think about taking out a small business loan. It can become your first step towards becoming a corporate brand. The world is full of stories of successful people who made it big in business. For starting a business and running a business, you need funds. If you are not from a rich family background then small business loans can help you start this journey. At least it will help you in planting the seed of business.
What is a Small Business loan?
Many people also call it an SBA loan. This is a government small business loan that is issued by private lenders. The government works as a guarantor for your business loan. Due to this in case of a default or bankruptcy, the government pays back this loan.
Benefits of taking a Small Business Loan
Starting a business is like a dream and arranging funds to start a business is a task. Business loans make it possible. You can get a loan for starting a business at low interest rates. Additionally, the business loan EMI is also affordable. You can also take advantage of government business loan schemes. Here is a list of the most common benefits of taking a loan for business.
No need to Invest from Savings Account
You do not need to invest your money because someone else is financing the business. You can use your money in a savings account for hardships or managing business situations.
In case of an SBA loan, banks do not ask for collateral. This is because the government is giving guarantees. Additionally, many private lenders also do not ask for security deposits considering your good credit rating. There are many reasons for making losses in business. If you face a business failure then your personal assets are not at risk.
Money in Bulk
In case of a business loan you get money in bulk. Due to this you can make big decisions. Additionally you develop the capacity of taking big risks.
Better Credit Ratings
When you take a business loan you have a fair chance of increasing credit worthiness of business. You only need to make timely payments because the bank trusts you while approving business loans. Due to this you can also improve credit score.
Small business loans offer easy payback cycle
If you have a good business plan then banks can give you an easy payback cycle. Due to this it is easy to repay business loans in full after you make business profitable.
How to get a business loan?
Taking a loan for business is a good idea if you are planning to expand business. Saving money for growth is good but it is always not possible. Banks help you with quick loan approval if your credit score is good. If your business is doing well then there are many pre-approved offers in your bank. Banks suggest you depending on your business transactions and revenue model. A pre-approved loan is the fastest way to take a business loan. In the normal scenario when these offers are not available, contact your bank.
They will ask you for income proof, identity proof documents related to business. The first objective of bank executives is to make sure that the money will come back. Additionally they only want to give a loan to a genuine person who is serious about re-payments. Your credit rating will show this picture. Once the bank is satisfied with the documents, they will reimburse the amount.
How to calculate EMI using a Loan Payment Calculator?
The process of calculating EMI is very simple. You will find this calculation with almost every financial institution. A loan payment calculator or a small business EMI calculator needs these three numbers.
- Loan Amount (based on your current requirement)
- Interest Rate (Estimated)
- Tenure (how much time you need to pay back loan with interest)
Once you enter these details, click on the “Calculate” or “Proceed” button whatever applicable. In a few seconds you should be able to see the results.
How to make a small business a big corporate brand?
The idea of making it big is on every entrepreneur’s mind. Irrespective of the high business failure rate, many companies make it to the top.
Less Profit, More Sales – Works well but it is not the best business model.
These are some techniques that can transform your business into an international brand.
Use funds wisely and avoid overspending in business
The most common reason for business failure is overspending. Many people find investors online and start burning money from day one.
Stay Understaffed in early stage of business
Being understaffed may not sound like a good idea but it is a great tool to increase productivity. Always remember, you are running this organization on a small business loan. Saving money is very important. I am not asking you to push people and get the last drop of juice out of them. Just make them more responsible and hard working during business hours. This will automate the process in the longer run. From hiring sales executive to software developer, every new employee will contribute towards making business successful.
No Compromise on Quality
There is no doubt that the less profit more sales model works well in the short run. But if you have to expand your business, you need more profit. Keep working for increasing profit in business. Many people decrease the level of quality and avoid a price rise. Due to this many customers start running away from your brand.
As soon as you get some funds start improving quality. If you have to increase the price of the product, go ahead. It may become unaffordable for some but many will stay connected. These connected customers will bring more customers to fill the gap.
Invest in Marketing
Marketing has the power to connect you with new customers. Existing customers are an important ingredient for a business survival and new customers are essential for growth. Spend a large part of your small business loan on marketing the product.