Most small business owners will spend a large amount of time worrying about cash. You can’t start your business, or grow your business without it. But what should business owners do if they don’t have enough to kickstart their dream, or make that dream grow once their funds are running low?
As a small business owner, deciding how to fund your growth can be stressful and challenging. For many business owners, the best choices will be either bad credit business loans or unsecured business loans.
Before you apply for a loan, it’s a good idea to get your finances in order. Here are some steps you can take:
Check your credit history
It’s a good idea to check the credit details for both yourself, and your business. This will put you in a better negotiating position, and ensure that you’ve cleared up any incorrect credit problems that could prevent you from getting finance. If you have poor credit history, you do have the option to get a bad credit business loan, which will allow you to receive funding at a slightly higher interest rate.
Know what you need
The next step is to determine exactly why you’re borrowing money, how you’ll repay your loan, and what you’ll be using it for. Consider the day-to-day life of your business. Will you have enough liquid cash to deal with any issues as they arise? Consider adding to your initial loan so you can be sure to have enough to get you through any problems.
Gather your documentation
Once you know exactly why you need funds and how much you’ll need, it’s time to gather all relevant documentation. This may include banking statements, invoices, and more. Luckily, there are now a number of lenders available online so this can help make the process much easier.
Small business loans will often be secured. This is when you put up an asset as collateral- such as your home. Many business owners don’t want to do this, which is why they take an unsecured business loan. This will involve a higher interest rate since the lender is taking on more risk with you. But it does mean that if your business goes under, your house won’t be on the line.
If you’ve made some mistakes in the past or you have a poor credit history, you may have previously thought you had no chance of getting finance to grow your business. But there are a number of lenders who will allow you to get a loan even if you have bad credit- as long as you’re willing to pay more in fees or a higher interest rate.
Have you started looking for financing for your small business? Did you use an unsecured or bad credit loan? Let me know in the comments below or get in touch with your thoughts.