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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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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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