What Are the Different Types of Business Loans That Exist Today?
Have you always wanted to start a business of your own? In 2019 there were close to 6 million small businesses in the United Kingdom. Starting a business can change your life for the better, providing you with more income than you could ever make otherwise.
That’s great. But unfortunately, starting a business can cost a lot even with the many philgeps opportunities in the Philippines for example. It takes money to make money at scale.
But don’t let this stop you from achieving your dream. If you’re getting ready to start a business, it’s time to find out about the different types of business loans available to new startups, so here’s a quick overview.
Sometimes the best business loans are the smallest. A microloan is typically about $50,000 or less, and it covers the cost of legal fees, a website, early marketing, business insurance, and other basic startup costs.
2. Business Lines of Credit
If you and your business have a good credit score, you can ask your bank for a business line of credit. You can use it to pay for basic start-up costs. It’s an allowance that lets you borrow to pay for things as you need them and repay the money as your business gets established.
3. Personal Loans
Getting a personal loan means you can borrow from a friend or family member instead of involving the financial industry. This can be the quickest way to borrow money, but there’s some risk involved.
If for some reason you can’t pay back the loan, you could make the important people in your life very upset with you. It’s probably best not to borrow from friends and family if you have other options available.
4. Credit Card Financing
If you have a bunch of credit cards, you can use them to launch a company. It’s not common, but yes, it’s possible. As long as you can pay your cards off before you drown in interest, it can work without backfiring. It may be the very thing you need to help you realize your dreams of business ownership!
5. Private Investors
Private investors like UK trade financing lend heavily to small businesses. Sometimes they expect to own a share of your company or to reap part of your company’s profits. But this can still be a great option for getting your company started.
If you’d rather self-finance, you can use your savings and cash in financial instruments like CDs or bonds. Borrowing from yourself can be risky because you’re pouring all your life savings into your business. But it’s one way to avoid getting into debt.
Use These Different Types of Business Loans to Start Your Company
So now that you’ve had an introduction to the different types of business loans, see what works for you. Your decision should depend on how sure you are that you’ll have a profitable company and the amount of debt you can handle.
For more articles about finance, business, and more, check out the rest of our blog!