Getting a business loan can be very beneficial. Whether you plan on using the funds for new equipment, a training course, or marketing, the influx of cash can take everything to a whole new level. That being said, you can’t exactly reap the benefits of getting a business loan unless you first find a lender.
Establish your needs
Picking a lender is like buying a new screwdriver, you have to first establish your needs before making a decision. If your loan is relatively small then finding an individual who can lend you the full amount could be wise, perhaps even a business connection that you’ve made.
Conversely, if your business loan is rather large in size then going to a bank will be your best bet as individual lenders may not have the financial capacity to meet your needs.
Banks vs. individual lenders
For decades people have pondered the question of whether you’re better off getting a loan from a bank or an individual lender. There are a few key differences between the two:
- Lots of paperwork
- Slow processing times
- High reliance on credit score
- Less paperwork
- Faster processing
- Looks at the details of your business rather than your credit score
Upon inspecting the bullet points, you might think that getting a loan from an individual is better in every way, but that’s not necessarily the case.
There are certain downsides that you should consider such as getting loan sharked if you fail to make a payment or being tricked into exuberant interest rates. Furthermore, while banks can deny business loan requests, you could always borrow against your other assets such as a house if you so choose.
The third option
If you want something in between a bank and an individual then you could take a look at Lending Club. If you’re not familiar with the site, it’s essentially a peer-to-peer lending site that allows you to take loans from other members on the platform.
You should note that you need a minimum credit score of 660. That being said, you could borrow as much as $35,000 without dealing with the hassles of individual lenders and bank paperwork.
Getting a loan for your business can be a great move if you play your cards right, but just ensure that you choose a lender that fits your needs because there’s no one-size-fits-all solution.