There are many reasons businesses will need additional funds or capital. In order to stay competitive in the market, a business owner must be ready to invest more. However, small businesses and startups usually experience difficulty in scaling their business due to limited financial resources.
In order to thrive and succeed, businesses must have a steady cash flow. Unfortunately, sometimes clients don’t pay on time, a business partner suddenly cancels a collaboration, and business can be slow during certain periods. These incidents can disrupt or even wreak havoc to a seemingly healthy cash flow. When it’s time to seek financial assistance, business owners can look at different options to help fund the business.
Funding Options for Businesses
When you’re looking for a way to finance your business, it’s important to do a comparison on rates and terms. The most common loan options for businesses are:
– Business line-of-credit loan
– Installment loan
– Balloon loan
– Secured and unsecured personal loan
– Letter of credit
– Guarantor loan
– Invoice factoring
Loans can be referred to in different names, depending on the lender or financial institution. Credit can also be obtained from various sources such as traditional banks, direct lenders, peer-to-peer lending companies, credit unions, factoring companies, and more.
What Is An Installment Loan?
An installment loan is any type of borrowing that is settled through regular and scheduled payments. It’s a type of loan that can be obtained by individuals and organizations. When you pay an installment loan every due date, you’re paying off a percentage of the principal amount plus the interest rate applied to the loan. The loan repayments are computed based on the following variables: the loan amount, the interest rate (and fees) applied to the installment loan, and the duration of the loan term.
What is the difference between an installment loan and revolving credit?
The main difference between an installment loan and revolving credit is the number of payments. Installment loan payments are fixed while the payments for revolving credit will change depending on the loan balance. The best example of revolving credit is credit card debt. An installment loan is a good option for business-related purchases since you’re able to purchase big-ticket items or equipment without the need to pay for it in a lump sum. If you obtained a car loan to buy a vehicle for business-related deliveries, the repayment period usually lasts 3 years up to 5 years. By the time you finished paying off your car loan, you may opt to trade the vehicle for a more current model.
What are the benefits of an installment loan for my business?
An installment loan has several benefits for businesses that need additional funding for capital. The following benefits make an installment loan a great option for entrepreneurs and startup business owners:
1. Quick and easy application process
It’s easy to obtain an installment loan and the speedy loan process will surprise you. It’s possible to apply for an installment loan in-person or via the Internet. No matter where you choose to send your loan application, the entire loan process is straightforward and uncomplicated. You simply need to supply the information required by the lender and submit any required documents and the loan provider will give you a decision within the day. Online loan providers like Credit Ninja offer a quick and hassle-free way to get a loan online.
2. Bigger loan amounts for all types of borrowers
An installment loan usually permits borrowers to obtain a larger loan amount compared to payday loans and other types of personal loans. Depending on the loan provider you work with, you can be granted a loan even if you have poor credit or zero credit.
3. Longer terms with fixed payment amounts
Because the repayment amounts of installment loans are fixed, there’s no need to worry about going beyond what you’ve budgeted for each month. Knowing exactly how much you need to pay makes it easier to handle loan repayments.
Installment loans have longer repayment terms which make it more suitable to use for business-related purchases and transactions. You don’t have to worry about finding enough funds to pay off your debt right away.
Sometimes businesses will encounter unfortunate and unplanned incidents that need immediate cash, it could be a delivery vehicle that broke down and need immediate repairs or a shortage of cash when you have to pay your suppliers. Whatever the reason, an installment loan from the right loan provider can give you the funds that you need with very little waiting time. Growing and managing a business is not only hard work, but there’s also plenty of risks involved. It’s important to choose a reputable provider which can offer the best loan deal that your business can take advantage of.