Loans That Can Help Propel Your Small Business

Business entities are considered small and medium-sized enterprises because they have limited resources. While the definition of SMEs may refer to the number of employees of the business entity, it also reflects the financial capacity of these businesses. Undoubtedly, the limited resources of SMEs, such as small starting capital, is one of the hindering factors for growth.

One of the most viable solutions to this problem that an SME can take is to apply for a loan from a bank and other lending institutions. The additional capital can then be used to purchase more commodities, hire more employees, and expand its office space.

There are many kinds of loans, and one of the following types may be the best option that your business can apply for so you can have the additional capital.


LPO Financing

This loan option can be the best way to have the needed capital when your business has been awarded a contract for particular jobs or commodities by virtue of local purchase order or LPO and local supply order or LSO. For your SME to take such a profitable opportunity, you must be ready with the required cash to be able to accept the contract. In this case, an LPO financing loan from a lending institution that acts on loans quickly may be the wisest thing to do.

Invoice Discounting

When your operations are being affected by your unpaid credits to some suppliers of your commodities and services, you can get to a lending institution and apply for invoice discounting. The lending institution will pay your unpaid invoices so you can get back to your normal operations again. This can be the best option for retail stores and others that sell commodities and services.

Import Financing

When you are engaged with the buy and sell of imported products, and you ran out of cash to pay some charges and taxes at the port, then an import financing loan can save you from the inconvenience. A bank will lend you money on time, so you will not be burdened with additional charges.

loan applicationBid Bonds

If you are a small-time contractor and you need some money for your bid bond, you can apply for a bid bond loan so you will be able to raise the required amount. For a small business, winning in a construction bidding contract is an opportunity for income, so you should opt for a bid bond loan than let this profitable chance pass you by.

Although secured loans can be used to finance various needs like hospitalization, education, and other purposes, you also utilize this type of loan to increase your capital. This type of loan can even be more helpful when you need more funds because it can allow more loanable amount because it requires collateral.…

Essential Steps to Get a Business Loan

Starting a business requires capital, and sometimes business owners may find it hard to raise the money. The good news is that financial institutions are offering business loans to business owners who are short of capital. However, there are some requirements that the lenders require of the business owners before they give them the business loan. Therefore, if you know what the lenders need, it will be easy for you to acquire the loan. Here is what to know to get funding for the business loan.

Determine How Much Money You Need

moneyBefore your loan is approved, lenders will ask you how much you need and what you need the credit for. It is therefore essential to have this information so that you can justify why you are taking the debt. Most of the time business owners request for business loans to start a business, to manage expenses, to build a credit history and to invest in new inventory. Depending on your needs, you can estimate the amount you need and estimate the monthly payments. Take a loan that you can repay with ease to avoid financial constraints.

Decide on The Best Type of Loan

It may be hard to get a business loan if you have a new business because most lenders need the business to have operated for a certain amount of time and minimum annual revenue. If you have no income and your business is not established yet, consider applying for a personal loan. A small business credit card can also work. Unlike a business loan, the credit card loans and personal loans are unsecured therefore they do not need collateral. They, therefore, charge a higher interest rate, and they do not build on the credit history. You should, therefore, put all this into consideration.

Check Your Credit Score

financesBefore applying for a loan, ensure that you have a high credit score because it will be easier to get your loan approved. You should, therefore, have your credit report ready with you.

Determine Your Collateral

The lenders often protect their interests by asking for collateral from their clients. You can secure the loan with assets like vehicles and land among others. If you have insufficient business assets, you can use your assets like your car and home. The bank will take the assets if you default in your payment so you should avoid using personal assets that you can’t afford to lose.…