3 Reasons to Refinance Your High Cost Business Debt
This article is from Excelsior Growth Fund, a Venturize supporter.
This article is from Excelsior Growth Fund, a Venturize supporter.
As you navigate business financing, it may be tempting to use your personal finances to help out when your business needs a boost, but that is not always the best solution in the long run. Separating your personal and business finances can help ensure you treat your business like the independent entity it is, while safeguarding your personal finances.
The Right to Transparent Pricing and Terms
You have a right to see the cost and terms of any financing you are offered in writing and in a form that is clear, complete, and easy to compare with other options so that you can make the best decision for your business.
What this means for lenders and brokers:
Starting a small business is hard work. The list of things you have to do in order to turn your dream into reality may seem overwhelming at first. When faced with such a formidable to-do list, it is easy to think of a formal business plan as something to table for later. After all, organizing a list of responsibilities and checking off items one by one as you accomplish them is itself a form of planning. Why waste time creating and perfecting a business plan at this early stage of the game?
As a general rule of thumb, banks will require a borrower to put up collateral for a loan. The only exception to this rule is for clients who have a long-term relationship with banks and whose business has proven to be profitable over a multi-year period.
Collateral is important for banks to reduce their risk. If the business is not able to pay back the loan, a bank may decide to take ownership of the collateral that has been pledged to them in the documents you sign when you got the loan. Usually a bank will not take ownership of collateral if you miss an interest payment, or one or two repayment installments, but will if they feel that their loan is at risk.
Before talking to a lender about a loan for your small business, you should understand the basics of your funding options. Having a better understanding of your options at the outset can save you a lot of time, energy and money. We’ve identified the most popular types of loans for small business owners as well as their features and things to consider before applying for funds.
Some information on this page is adapted from content that originally appeared on Nav.com, a Venturize supporter.
Before you walk into a bank or apply online, it’s important that you’re prepared to have the important conversations that will help you secure financing for your small business. Here are a few questions you might want to consider ahead of your big chat.
Have you ever approved a loan for my type of business?
What is your average loan amount for a business of my size?
Who approves or denies the loan application?
How long does the application process take?
Venturize.org is a free online resource hub for small business owners like you that need help accessing tools and information to sustain and grow your business. Venturize offers unbiased education and resources to help bolster businesses and empower you to make informed financing decisions. Venturize is not a lender— but a program from nonprofit organization Small Business Majority.
Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy. We engage our network of more than 85,000 small businesses and 1,500 business and community organizations to deliver resources to entrepreneurs and advocate for public policy solutions that promote inclusive small business growth.
Copyright © 2024. This site is managed by Small Business Majority—a 501(c)(3) nonprofit organization.