Advertising
Advertising

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.

Advertising

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.

Advertising

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.

Advertising

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.

Advertising

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

More by this author

6 Reasons Why French Press Makes the Best Coffee 9 Things To Remember If You Love Someone Who Doesn’t Easily Show Affection 12 Ways To Earn More Money While You Have A Full-Time Job 7 Steps to Reduce Your Laptop’s Fan Noise & Increase Speed 7 Ideas To Decorate Your Home Using LED Strip Lights

Trending in Money

1 How To Pay Off Credit Card Debt Fast: 7 Powerful Tips 2 How To Make a Million Dollars in 7 Steps 3 7 Cheap but Powerful Products That Can Help Your Waste Less Food and Save Money 4 How To Retire Early (And What To Consider Before You Do) 5 How To Create a Budget (The Complete Beginners’ Guide)

Read Next

Advertising
Advertising
Advertising

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.

Advertising

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.

Advertising

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.

Advertising

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.

Advertising

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

Read Next