Whether you want to get a business loan to kickstart your business or you’re growing a new company, you probably aren’t too familiar with the entire process and what’s required. Inexperience when it comes to business loans can lead to a lot of financial problems in the future!

Here are some of the answers to the questions you may have in mind about how to get a business loan.

Business Loans—How Can I Get One?

Getting a business loan isn’t as easy as going to the bank, signing an agreement, and leaving with a wad of cash. Though this is a very broad question, the best way to start the process of getting a business loan is to think about why you need a business loan in the first place.

Begin by looking at your reasons for getting a business loan, how much money you need, and if you can afford to repay it. Lenders will be incredibly thorough, and they’re going to want to know what you need the money for and how much you need so that they can assess the risks. Once you’ve prepared answers for these questions, then you can start to approach potential lenders.

Not all business loans are the same; there are a plethora of different business loans available, and finding the one for you will depend on your circumstances. Here’s an example—if you don’t have any tangible assets you can pledge as collateral, getting an unsecured business loan from Carbon Neutral Finance is your best bet!

The basis of the loan that you choose depends on what you plan to use the money for. If you’re looking for short-term funding for cash flow, a business overdraft is ideal, unsecured business loans are your best bet if you have a good credit history, and there are many more types of loans that lenders offer.

Is Getting a Business Loan Difficult?

The difficulty of getting a business loan will largely depend on your current financial situation, how long you’ve been in business, and whether or not you have collateral. Some lenders have lenient requirements, while others have incredibly strict and extensive requirements.

Be prepared to submit a large amount of paperwork if you plan on taking out a hefty loan for your business. Getting a loan is also a lot more difficult for small to medium businesses—studies show that 75% of their loan applications get rejected by banks!

Banking regulations don’t constrain Non-bank lenders, which means that they can provide loans to small businesses since the loans they make are unsecured. Non-bank lenders usually ask for higher interests than traditional bank loans, so make sure you understand the risks before applying for one and inevitably regretting it once the time to repay is upon you.

Types of Business Loans 

Borrowers have the option to choose from various business loan types that Carbon Neutral Finance and other loan entities provide. Some of the business loans include:

  • Unsecured business loans that borrowers can get during the period of low or negative business cash flow. These are often short-term, with a maximum loan term of 24 months. Borrowers may also need to pay daily or weekly. 
  • Line of credit can be tantamount to a credit card where you can access funds anytime the business needs it. In this type of loan, the interest only applies to the amount the borrower withdraws.
  • Carbon Neutral Finance also has invoice finance of oftentimes called “factoring.” You sell the invoices of your business to the lender and you can borrow up to 80% of the amount on the invoice. 

Collateral & Credit

You can get a business loan without having to put up assets as collateral. These loans are called unsecured loans! This is especially beneficial for small businesses that may not have any assets in the first place.

Lenders such as Carbon Neutral analyzes your finances and credit information online to determine whether or not you are stable and capable enough to repay the loan amount. However, if you have no credit record at all, getting a business loan, in general, will be challenging. If you have no credit record yet, we recommend starting by getting a personal credit card with a low limit and making sure you pay bills on time.

If you have bad credit, getting a business loan is not impossible. Some non-bank lenders provide business loans to people with bad credit, but they will charge incredibly high-interest rates because of the higher risk!

Getting your business going can be difficult. Knowing how to manage your finances and when to take out a business loan is key to thriving in the industry.

Need a loan? Visit https://carbonneutralfinance.com  today!

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Carbon Neutral Finance™ is a Fintech Bear Company ABN:82975330228 acts under a fund facilitator / commercial aggregator. This content does not constitute legal, tax or financial advice. Please contact your advisor for more information.Products, features and info shown are general in nature and may vary depending on individual situations, please refer to loan contract/offer for terms relevant to you.

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