5 KEY QUESTIONS ABOUT BUSINESS LOANS
A business loan is a type of financing that should be used to help you grow your business. You can use it to, among other things, buy inventory, acquire an asset, or pay your employees. Therefore, a business loan is made to make more money, that is its goal. Remember that accounting and financial information is vital in this process, which is why you must have a good accountant. With this article you will learn 5 questions that you should know to access a successful loan.
1. DO I NEED TO HAVE MY BUSINESS LEGALLY STRUCTURED TO ACCESS A BUSINESS LOAN?
An essential requirement in commercial loans is that personal income and expense accounts are separate from business accounts. Remember that you must demonstrate that your business has or will have sufficient payment capacity to be able to repay the commercial loan.
2. IF I HAVE MY BUSINESS LEGALLY STRUCTURED, DOES MY PERSONAL CREDIT NO LONGER MATTER?
Unless your business has already built business credit, your personal credit will always be necessary when qualifying for a business loan. Remember that a loan is associated with risk and risk is associated with trust. As the owner of your business, your credit profile and your behavior managing credit will be necessary for fund providers when evaluating whether or not to give you a business loan.
3. IF I JUST STARTED MY BUSINESS CAN I ACCESS A BUSINESS LOAN?
Yes, although it will be more complex. We can offer you two options: A personal loan for business, where the qualification will be based strictly on your individual behavior and your credit profile.
A good option may be an SBA loan to start a business, obtaining better rates and longer terms (5 or more years), but you will also have to work a lot to get it because, in addition to the documentation, you will be asked for a business plan and financial projections that prove that your idea will be able to have the financial return necessary to repay the loan
4. SHOULD I ESTABLISH A BUSINESS RELATIONSHIP WITH A FUND PROVIDER?
As in any area of business work, obtaining permanent capital is always a fundamental need in the growth of a business. Your capital advisor should be on the same level as your insurance broker, your accountant, your lawyer, and your banker.
5. CAN I DEDUCT INTEREST ON MY TAX RETURN?
Remember, there is not a single type of loan in the market, there are different financial products, ways to access money, such as SBA Loan, fixed term, factoring, there are loans aimed at certain commercial activities, loans from non-profit organizations, etc., and in many of them, such as those of the government, they have more advantageous interest rates. Your accountant is essential in this process, since the financial order of your business is vital to achieving a successful loan.
Finally, don't forget taxes. If you don't file taxes or are constantly reporting losses, it will be harder to build business credit, and even harder to get a loan with good terms. Remember, tax returns reflect the health of the business and will be a crucial element when applying for a bank loan.