At one point or another, every entrepreneur and established business owner faces the issue of funding. There is a long list of reasons why a company may need additional capital, from rapid growth and expansion needs to unexpected costs and new trends. The big question is, should they turn to a personal loan, or should they reach out to a business lender?
Some business owners shy away from traditional and alternative business loans because of the perceived risk, debt and interest involved. In reality, there are many advantages in using the right lending option for start-ups, small businesses, and large companies alike. If you’re still on the fence about seeking outside funding, here are some benefits you should consider:
1. Additional cash for projects
When you’re busy running your business and trying to meet its day-to-day needs, coming up with additional cash for business projects can be a real challenge. The funds a lender can provide can assist you with endeavors like expansion, upgrades, large equipment purchases, and hiring more staff. Quick cash flow infusions are also imperative when dealing with unexpected costs or setbacks.
2. Significantly lower interest rates
One of the biggest pitfalls of using personal loans is that the lending limits tend to be lower and interest rates are higher. You may simply not be able to secure all the money you need with a personal loan, plus the interest payments can be crippling. Business funding, on the other hand, can offer lower interest rates than personal financing, while also providing the amount you really need to set your business plans in motion.
3. Greater security in the event of failure
Unfortunately, unexpected situations and events that are completely out of your control can halt your business plans. If you have a personal loan funding your business, it puts your personal life and assets at risk. A business loan, on the other hand, will protect you personally in the event your business fails. If you are forced to close your doors, there is no need to repay the loan. When business liquidation takes place, the assets will pay for the loaned amounts.
4. Improved, stronger business credit
Of course, over time, your business’ credit score will improve as you send in on-time payments and loan completion. Your creditworthiness will strengthen, your business will be in a solid position in the event it needs additional funds in the future and new doors of opportunity will be open to you.
Before you jump in with a business loan option, just be sure you’re choosing the right one for your business. Every business is unique, and certain loans can be tailored to your specific needs. Consider merchant cash advances and microloans, for example. It’s also important to partner with a provider like firstamericanmerchant.com that specializes in working with your business type and industry, understands the challenges you face, and offers exceptional and round-the-clock support.