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7 Tips for Getting a Short-Term Loan for Your Business Startup

7 Tips for Getting a Short-Term Loan for Your Business Startup

Getting loans for small business startups is not an easy task, the reason being that startups are not eligible for loans from banks. But there are several other ways of financing your business. To find the most convenient means of funding a business, you will have to look under the rocks.

Here are some of the ways of getting good loans for startups.

1. Using retirement account (ROBS)

Rollover for Business Startups, known as ROBS, allows you to invest the funds from a retirement account without requiring you to pay any early withdrawal penalties. You do not have to pay income taxes either. With adequate professional help, you can use the retirement account for a new business. To utilize ROBS, it is essential that the company is set up as “C” corporation. If the company becomes successful and starts generating profits, then a portion of the money will go to your 401K, the amount of which is calculated according to the percentage of ownership. You can consult a ROB’s specialist to make the best of opportunity.

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2. Peer-to-Peer Loan

There are Peer-to-Peer websites which focus on offering personal loans for three to five years. The aim of the loan is to pay off the credit cards or debt consolidation. Personal loans can be used for starting a business.

The problem with this type of loan is that you will be eligible for it if you have good credit score. If your credit rating is not okay, then do not waste time trying to get this loan.

3. Conventional Bank Loans

The biggest advantage of these loans is that they have pretty low interest rates. The rates are low because there is no involvement of any federal agency. These loans can have a shorter time for payment as compared to the SBA loans. They can often include balloon payments. It can be a little difficult to get approved for the loan.

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4. Alternative lenders

For small business startups that lack strong financial history, the alternative lenders sound like a very attractive option. They mostly offer online applications. The decisions on approval are made in just hours, and the funding is provided within five days of the request.

The benefit of working with alternative lenders is that you have a chance to finance your business even without a strong financial background. There are a few limitations about the usage of the loan, but approval for the loan is instant. The drawback is that the interest rates can be higher as compared to the ones charged by banks.

5. Using credit cards for financing a startup business

It can be a cost-efficient method of paying for the startup. Several credit cards offer zero percent interest promos. During that period you can borrow money free of any interest. There are rewards and cashback programs. These programs allow you to earn money for your business by just charging the purchases of the card. Some cards allow you to make $500 by only signing up for the card and making a few purchases in the first few months.

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Business credit can be built by responsible use of the card. Credit cards are also sufficient for good debt consolidation tool. You can transfer balances and save money on interest by taking advantage of the zero percent interest.

The disadvantage of credit cards is that they are not a stable source of credit. The credit card companies have the right to lower the credit limit without any warning. The interest rates are high as compared to other sources of capital. Using personal credit cards for business can affect the individual credit card score.

6. Borrowing from acquaintances

Pitch your idea to your friends and family. If they like your idea, they will be willing to contribute some money for the startup. Remember to get the loan in writing so there is no misunderstanding later on.

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7. Use crowdfunding

You can focus on raising small amounts of money by involving a large number of people. This can be done by using a crowdfunding website. There are different ways of crowdfunding.

You can build a strong foundation of your startup by opting for any of these short-term loans. They will give your start up the boost it needs while giving your investment a security blanket as well.

Featured photo credit: reynermedia via flickr.com

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Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

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