An unsecured loan can provide the resources to make your dream a reality. To ensure that you make the right decisions when borrowing money, we decided to discuss some of the more common myths associated with unsecured loans. By Chris Fuller
Congratulations on taking the leap to start or expand your dream business.
An unsecured loan can provide the resources to make your dream a reality. To ensure that you make the right decisions when borrowing money, we decided to discuss some of the more common myths associated with unsecured loans.
MYTH: INTEREST IS THE MOST IMPORTANT FACTOR
Acquiring a loan with the lowest possible interest rate can certainly bring the overall cost of the borrowing down. However, it’s just one of the many factors to consider when taking out an unsecured loan for your business. Getting lower interest rates is ideal, but sometimes it may make more sense to accept a loan with a longer term and higher rate to give yourself more free cash flow in the startup or expansion phase of your business. Cash flow is the life blood of any successful business.
MYTH: GET ONLY WHAT YOU NEED TO START THE BUSINESS
Many people when starting a business will only get the bare minimum needed to start the business. The logic is clear: Don’t take on additional debt you don’t need. The problem with this strategy is, things happen, and unforeseen circumstances arise in business, just as they do in life. If you started your business on a shoestring budget, you will be ill-prepared for any hiccups or surprises that will surely come your way. One of the most common reasons for a new business or an expanding business to fail is being undercapitalized. When starting a business, you will quickly find out two things: It always costs more, and it always takes longer than planned.
MYTH: YOU DON’T NEED A FINANCIAL PROFESSIONAL FOR UNSECURED LOANS
This may have been true 10 or 20 years ago, but today there are many more loan options and lenders available for entrepreneurs and existing business owners. Having a financial professional assist you in procuring your unsecured financing can prove to be invaluable. The adviser will ensure what money you are able to borrow works toward your long-term goals and projections. The adviser also can ensure you apply for the right loans in the right amounts based on your credit profile, current verifiable personal and business income, as well as the type of business you are starting or currently operating. When in doubt, it is best to consult a financial professional.
Chris Fuller
Chris Fuller has been involved in business finance for over 25 years. Fuller started out in equipment leasing and then founded American Business Credit in 2006. American Business Credit’s core business has been to assist clients in using unsecured funding options to start and grow their small businesses.