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5 Ways to Get Personal Loans for A Business Startup

5 Ways to Get Personal Loans for A Business Startup

There are several sources which can offer finances for your new business. You can take help from banks, credit cards or commercial lenders. A lender can give you expert advice in determining the type of loans and finances you need for your new business. Before deciding on a method of receiving the loan, it is important that are aware of the nature of different loans.

Here are some of the structured loans and the common variations.

1. Line-of-Credit:

It is one of the most beneficial types of loans for new businesses. It is one of the permanent arrangement of loans that every business should have because it helps in protecting your company from any delayed flow of cash or emergencies.

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These loans are for purchasing the real estate and different types of equipment. It is for short term and assists in extending the available cash in the checking account of the business to the maximum edge of the contract of loan. Every bank has a unique funding method, but some money is shifted in the checking account so that cover checks are included. The business also pays interest on the advanced amount until it is paid back.

They have lowest interest rates because they are seen as low-risk loans. Individual banks add a section that allows them to call off the loan if the company is in some trouble. You pay the interest payments every month while the principal payment is made when it is convenient for you. It is better to deliver the payments often. Most of these loans are for just a year, and they can be renewed automatically by paying annual fees.

2. Installment Loans:

You pay these loans back in monthly installments which are equal. The payment covers the interest and the principal amount. These loans are written so that all the business needs are met. After signing the contract, you will receive full payment, and then you calculate the interest from the day you receive the loan to the last day of it. If you can repay the installment before the final date, there can be a suitable modification of interest.

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It is an excellent loan option for startups as the loan is known as a business cycle. It is a four-month loan paid in installments, and it carries low-interest rates because of low risk. You can pay installments yearly, after half the year or quarterly.

3. Balloon Loans:

Balloon loans are mostly reserved for businesses which have to wait for a specific date before receiving payment from the clients.

These loans are primarily given under a different name, and you can recognize them by as the total payment is received when you sign the contract. The interest is only paid as long the loan is alive. They are pretty similar to the loans paid in installments.

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4. Interim Loans:

These loans are for business owners who can repay the loan, and their guarantee is dependable.

In these loans, periodic payments are made to the contractors looking for building new facilities and the mortgage of the building can be used for paying off the loan.

5. Secured Loans and Unsecured:

There are two forms of loans: unsecured and secured.  If the lender is a good acquaintance of yours and believes that your new business is comprehensive and knows that you will pay the loan on time, then the lender can give an unsecured loan. It is a loan in which there is no insurance pledge in case you fail to repay the loan. The lenders will only agree to this loan if they consider you a low risk. These are the best personal loan lenders, but as a startup, it is not easy to get an unsecured loan because you need to have a successful track record.

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A secure one requires some collateral, and it mostly has a lower and more affordable interest rate as compared to the unsecured ones. It often uses property or the inventory as collateral. It is estimated to last longer than the loan and is often connected to the reason of loan. The lenders value the insurance appropriately as this is supposed to repay the loan if it defaults.

Featured photo credit: ALTMAN BAIL BONDS via altmanbail.com

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Last Updated on March 29, 2021

Life Insurance: A Secure Way To Protect Your Future.

Life Insurance: A Secure Way To Protect Your Future.

Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

Importance of getting a life insurance

No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

Choosing the right insurance plan

If you’re about to select an insurance plan, you should consider some important factors:

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  • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
  • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
  • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

Differences between life insurance plans

Here’s a short brief of some plan categories you can choose according to your needs:

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  • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
  • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
  • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
  • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
  • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

So what are you waiting for? Plan for your future and live a happier and carefree life today.

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Featured photo credit: aryehsampson.com via aryehsampson.com

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