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Are Loans Good or Bad for Business?
Taking out a personal loan is a great way of getting out of debt but if it's not managed properly or you can't afford the repayments, you'll find yourself in trouble very quickly. Commercial or business loans can open up the company to new opportunities it couldn't otherwise take or help a firm regain stability if it's hit hard by some uncontrollable event that would otherwise threaten its existence, but they can also hold it back as they add to its monthly outgoings. In short, loans can be a very good thing but they can be a millstone around your neck if they're not properly managed.
Car Loans
Getting a replacement car is often a reason for a person or a business to take out a loan. This type of loan goes against an asset that depreciates badly, particularly if you're buying a new vehicle, so that the debt left after each monthly payment against the loan will be greater with the car's value. A car though isn't seen as an asset by most people. It's a necessity in life and business so the costs are often ignored. Financing a car is a complex thing. You can buy with a bank loan, lease through the manufacturer or finance through the dealership. Personal choice and your financial circumstances will determine which approach is best for you.
Financing a commercial vehicle for your small business can be carried out through your firm's bank. Talk to the bank's small business specialist and you'll get an idea of what they offer. You don't need to rely on them for the loan though because there are lots of companies in the market. Fleet financing companies are another option. While your bank may restrict the number of vehicle loans you can have with them at any one time, a fleet financing company will offer a loan for multiple vehicles.
How to Get a Loan
The qualification process for loans changes depending on the lender and the type of loan. It also changes with time. Before the Great Recession, lenders would offer firms loans up to 80% of the value of their commercial property meaning the company would only need to finance the remaining 20% but when the value of commercial real estate fell by 45% almost overnight, lenders found themselves in a hole so today you'll only be able to finance 58% to 65% of a property's value.
Commercial Loan Brokers
A commercial loan broker can get you a better deal when your firm needs a new loan because they work with a selection of different lenders. They're also good people for advice because if a loan application fails, they could steer you towards other avenues like peer-to-peer lending. These guys know the language of money so they can navigate you through terminology like "debt service ratios" and "merchant cash advances". These guys are the experts in their field so it pays to have them on your side.
Land Loan Rates
Real estate loads for small businesses are hovering just above the all-time low mark so this is a great time to get new premises or expand your existing property. How long your firm's been in existence is a major factor when taking out a loan as a well-established firm is a better prospect from the point of view of the lender. The loan rates can be anything from three to ten percent depending on your financial circumstances. These loans are collateralized by the commercial property so the rates are normally lower than other small business loans.
Bank Business Loans
A business loan from your bank shouldn't be dismissed out of hand. Your firm has a relationship with the bank. They profit from you already and will normally be happy to entrench you further with a bank loan. These loans are more general in nature so you might not get the same sort of rate you'll find with lenders who specialize in loans for commercial property or to finance a fleet of vehicles, but you should still find out what your bank is offering while you speak to other lenders.
Source: https://www.life123.com/article/are-loans-good-or-bad-for-business?utm_content=params%3Ao%3D740009%26ad%3DdirN%26qo%3DserpIndex&ueid=c9795f29-a934-4792-b0bf-060070619d04