There is a time in the life of a business when you need to deal with funding options. This may be to cover an unexpected event or you may start looking for a second location. Some business owners may want to expand their product line or invest in marketing.
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However, too many people don't have a clear idea of how much they really need or whether they need funding at all. There are also instances when the debt could actually sink you. For this reason, it is important that you give yourself a lot of thought before making a decision.
What is my business and personal credit score?
First of all, you need to know that both your business and personal creditworthiness can affect your application. This is especially true if you haven't had the time to build a strong company history. You can get a free copy of your credit report each year from all major credit reporting agencies: TransUnion, Experian, and Equifax. You can get your business credit rating from Dun & Bradstreet, Experian Business, and Equifax Business, but you will have to pay.
What are my options?
Now that you have a better idea of your credit situation, let's take a look at what you can actually get. You should also check to see if you have any assets that you can give up as collateral.
If you have bad credit and want to work with a traditional financial institution, you probably can't get anywhere without collateral and you might get rejected anyway. Not to mention, the process could be tedious and lengthy.
When you have bad credit, you likely have no choice but to seek alternative lenders. You have lenders like AdvancedPoint who study various other indicators of your company's health to see if you might be eligible. For example, you could pay more attention to cash flow and reserves over the course of credit history.
Whatever you do, make sure you only apply for funding if you think you have a chance. If you are not sure, only use services that do a soft query first to see if you can realistically get a loan. This prevents inquiries on your credit report that can negatively affect your creditworthiness.
Do you actually need a loan?
This is the last, but probably the most important, question you can ask. The reason for your loan will have a big impact on whether or not you will be accepted. You should take out a loan for superficial or unproductive reasons. You don't need a loan to make cosmetic changes to your office space. However, someone may be more willing to give you a loan if they want to expand your service offering or pay for ads.
So before you even start looking for a loan, you need to answer all of these questions. Once you have a straight answer, you can start shopping and looking for the best options for you.
About the author
Vipul is a professional blogger and online advertiser based out of Bengaluru, India. Always on the lookout for new ways to make money, Vipul explains all the possible ways that can help anyone make passive income online. You can connect on Twitter, Linkedin & Facebook