A personal loan is truly the loan for any reason. From consolidating your debt to redecorating your home, taking a vacation, there are many reasons for which one might apply for a personal loan. A personal loan allows the borrower to borrow a certain amount of money without requiring any collateral, and pay it back through monthly installments. The lender’s requirement for offering a personal loan is very simple. Most financial institutions ask for: Social security number Current employer information Previous employer information Gross income Purpose of the loan Co-applicant information, if applicable Apart from traditional lenders, major credit card companies also offer personal loans. To avail this, you must be a pre-approved card holder. Your creditworthiness and other factors are taken into consideration to decide the APR and loan amount. Even though this process seems simpler and easy, not all customers might be pre-approved to procure a higher loan amount or a low APR. Major card companies offering personal loans also allow you to set up automatic payments, thus simplifying the monthly payment process. It is imperative to have a good FICO score for being eligible for a personal loan from a traditional bank. Some borrowers perceive applying for a loan from a big nationalized bank as a hassle because of their many rules and paperwork.

Lending institutions consider lending for your business a high risk if you are struggling with bad credit or poor sales. The definition of high risk business varies with each leading institution. The most common features are: Bad credit If your business or you have bad credit history, then your business is considered to be risky by the lender and most transitional financial institutions would not lend you money. Poor cash flow If your company has poor or sporadic cash flow, the lender might consider this as negatively impacting your repayment ability and thus not lend you money. The business owner might use his personal property as collateral and apply for a business loan. Payment history If the business owner or the business has filed for bankruptcy or has tax liens; traditional banks do not lend money. New business Start up companies, of less than a year to 3 years find it difficult to get their business loans approved by many financial institutions. As they have not yet proved their sustainability, lenders consider them high risk. In some cases, a business cash advance might be a better option. Business cash advance lending companies usually do not require you to have a business plan, good credit, collateral or financial documents.

Getting a business loan for redevelopment for an existing business or for kick-starting a new one, choosing the right loan is essential to avoid losing excess rates under interest. The process of getting a business loan is also tedious and time-consuming. The finance market offers not only an array of lenders but also a range of loan offers for specific businesses. One common mistake that most businesses commit is that they pick the loan that is easiest to get and stop short in their search when they find one that approves their loan requirement. However, this is a major mistake because a business fails to look at other viable options that may be even better profitable in the long run for the business. Every financial institution would require the business credentials and all relevant business data and future plans in order to approve a loan. Taking out the business plans to various institutions would also open up possible avenues of interest that will enable the processing of the best loan. After you have made note what the ultimate purpose of the business and the loan venture is, one can easily compare the different loan quotes obtained from different venues to shortlist the best and then pick the one that best suits the businesses progress.

It is the era where entrepreneurship and businesses are at an all-time high. People are devising new ideas and coming up with plans to make those ideas a reality. But, as much as the idea is important for a business, so is the need to create the perfect business loan package in order to gain funding for materialization of that idea. Here are six steps to creating the Perfect business loan package to ensure that you get approved for loans: Create your business plan : It is of utmost importance that you create your business plan before you approach a bank asking for a loan. It is the only way you can effectively pitch your idea and persuade the bank to grant a loan. Without a properly written plan, the bank wouldn’t approve your request. Documents: Along with your business plan, include all supporting documents that may be supporting your plans. Anything which furthers your cause of persuading the bank to approve your business loan. Amount of loan : this should be a part of your business plan as well. The bank requires businesses to know their needs when asking for a loan so that an appropriate plan can be reached.

Business most often reaches out for funding for all types of business needs ranging from cash flow balancing, expanding a business, or starting a new business. Loans are the go-to solution for most financial needs of a business. While this type of funding has its merits, there are certain disadvantages that can impact a business in the long run. Collateral security issues: The primary requirement is to a put up some form of collateral in exchange for a loan with most lenders. While it helps secure a loan and start up a business, there is always the risk of losing all your prospects if the business fails and ends in defaulting on loans. Working a business under lender restrictions: There are financial institutions that outline a series of requirements to be followed until the full repayment schedule is completed. Essentially, a business may have to maintain its debt-to-equity ratio through the whole repayment tenure, failing which, a lender is authorized to demand complete repayment of the principal amount and interests. This can throw a business off its progress and even end in shutting-shop. Financial tightening: A business without a loan would have its revenue reinvested in various areas in the business, focused towards optimization of financial productivity. In the case of a business tied down with loans, most of its revenue before profits would be tied up for paying the loan, thereby minimizing the scope for growth.

Any business is in the constant need of funds to either regulate the business process during a time of crisis or to expand a business to suit inbound opportunities. In order to ensure that a loan is available for your business in a time of need and to smooth out the lending process in order to ensure the business receives the loan, here are few effective steps to follow from the loan application process to the securing step: Getting to know a few lenders can be helpful during business loan application processes as contact building with financial institutions helps the prospects of any business. These associations with lenders can help them value your business and when they know someone well enough they tend to process the business’s loan application comparatively faster. When starting with a business loan application, knowing what the fund is required for is essential. There are two basic categories when a business loan is a need and the loan application projects the same to the lenders. One can need a business loan either to save the business in the time of a financial constraint or when it is expanding. While the latter is a promising aspect, the former aspect renders a negative aspect to the potential of the business, thereby requiring more preparation on the loan forms.

A common misconception is that business loans are almost impossible to secure when your business’s financial statement projects a bad credit history. While the process may be rigorous there are other forms of loans that are provided by lenders under different conditions. In cases where a business’s credit risk is high, lenders will up the interest rates and other charges to ensure that the loan will not be defaulted on. There are newer lending platforms that approve loans based on the financial projection and progress of a business in the past three years or based on the achievable future projections and solid business plan. Some of the options for bad credit loans for small businesses are: Traditional bank loan: Since banks have higher restrictions for approving loans to those businesses with a bad credit, a traditional loan can still be secured if a business is willing to pay higher interest rates or provide a higher range of collateral. Merchant cash advance: While this form of funding is not technically a loan, a merchant cash advance can help when a business has cash flow issues. In this type of funding, the interests rate is pretty high in the market and therefore can put additional strain on a business if it continues to spiral financially in the long run.