You’ve got a great business idea and can’t wait to get started, so how do you know when the time is right to apply for a business loan? Whether you’re buying equipment, paying for supplies, or expanding your business, securing a business loan or SBA loan may be a lucrative investment for your business.
What is Business Lending?
Business lending is the process of providing funds to small businesses. This process can be used to fund new ventures or expansions of existing companies, and it can involve a variety of loan products including lines of credit, term loans, and revolving credit lines. Business lending at the right stage can significantly help businesses grow, and working with the right lender is just as important.
What Is A Business Loan?
A business loan is a lending agreement much like a personal loan where the lender gives money to the business, and the business pays it back in an agreed-upon amount of time with an agreed-upon amount of interest. Both personal loans and loans for small businesses come in a range of loan types, from mortgage and auto loans to lines of credit and installment loans. In general, personal loans are meant for personal purchases, whereas business loans are meant to fund business-related purchases. A business loan can be used to grow your business and increase its value.
When Should I Apply for a Business Loan?
There are many things to consider when deciding whether or not you need a business loan. Maybe you are in need of more equipment or inventory, or perhaps you need to hire new employees or pay off some of your existing debt. All of these are common reasons for applying for a business loan.
Scaling up your business oftentimes requires a great investment. Other situations when you might want to consider applying for a business loan include:
- Production opportunities that require a higher volume of inventory
- Cash flow deficit
- Upgrades or renovations that are necessary to keep up with competitors
Business loans are a great way to get the funds you need to grow your business, but they aren’t right for every business. In fact, they can be risky if you don’t have the right circumstances. When considering applying for a business loan, ask yourself the following:
- Is there sufficient cash flow in my business?
A good rule of thumb is that your monthly income should be at least double the interest rate on your proposed loan. If it isn’t, then that means you won’t be able to make payments each month without dipping into other funds or putting yourself at risk of defaulting on your obligations.
- Do I have enough cash flow to pay off a personal loan?
You should also be able to show that you can continue paying your current expenses, including any other debts or monthly bills. If your business is not profitable yet, don’t get a loan—it will just put pressure on you when there is none!
- Do I have a good credit score?
If you’re applying for an unsecured business loan, then your personal credit score is probably irrelevant; however, if you’re applying for an asset-based loan or a line of credit secured by business assets, then your personal credit score will be important. A bad credit score can make it more difficult to get approved for financing.
- Do I have any outstanding debts?
This is important because if you have a lot of debt, then your lender may be unwilling to grant you another loan. If you’re planning on using your business as collateral for the loan, it’s also something that will affect how much money they’ll be willing to lend.
Other Business Lending Options
At Members Exchange Credit Union, we understand your need for a trusted financial partner to achieve the level of success you deserve. That’s why we offer a variety of business loans and services to support your business needs.
- Commercial Real Estate and Investment Property Loans
- Term Loans
- Lines of Credit
- Church Real Estate Loans
Why Should I Get A Business Loan At a Credit Union?
Credit unions are a great option if you’re looking for a business loan because they offer lower interest rates than traditional banks and credit card companies. This makes it easier for you to pay back your loan without risking bankruptcy or other financial hardships that could jeopardize your business.
Credit unions are not-for-profit organizations that exist to serve their members by offering low-cost financial services. They also tend to provide more personalized service than banks or other lenders because they are more likely to know their customers’ needs and goals as well as the community in which they operate.
Benefits of Applying for a Business Loan at a Credit Union
- Lower interest rates
- Loan flexibility
- Lower minimums
- Lower fees
- Smaller loan amounts
- Flexible repayment terms
How to Apply for a Business Loan at Members Exchange Credit Union in Jackson, MS
Ready to take the next step with your business? Applying for a business loan at Members Exchange Credit Union is simple. Complete the three forms found here and someone from our business department will contact you! Wherever you are in the process, one of our expert Business Lending experts will help you every step of the way. Keep in mind that no appointment is needed, but if you would like to arrange a consultation simply schedule an appointment today.
At Members Exchange, we also offer the ultimate business checking account to meet your commercial needs requiring only a $50 deposit to open. Earn dividends on your e-Business Checking Account or even earn a higher rate of interest with a Business Share Certificate. Have more questions? Visit our FAQs on business loans and our business accounts to see how we can help you get started.