Are you starting your own business? Have you considered applying for an online installment loan?
It’s great if you have plenty of capital on hand to start your business, but that’s not always the case. Consider why some business owners seek an installment loan:
- 59% need financing to grow or expand their company
- 40% need to cover basic overhead expenses, like payroll or utility bills
- 26% want to refinance an existing loan
Do you see yourself falling into one of these categories? If so, an online cash loan could be the best course for you.
Are you ready to learn more? Here’s everything you need to know about getting an installment loan for your business.
What Is an Installment Loan?
An installment loan features a fixed number of payments over a fixed period of time. The terms are made at the outset in the installment agreement.
Most installment loans cover a period of 1-7 years. Some lenders don’t usually charge any penalty if you’re able to repay the loan ahead of schedule.
When you apply for an installment loan, you may need to secure the loan with a physical asset. This can make it easier for you to qualify for the loan even with a low credit score. In this kind of installment loan, the lender will take possession of the collateral in exchange for the funds you need. You’ll repay the loan as outlined in the agreement and, when all terms are satisfied, regain possession of your asset.
How Can I Get an Installment Loan Online?
Now that you understand what an installment loan is, let’s talk about how to secure one for your business.
1. Boost Your Credit Score
Most of the lenders first consider your creditworthiness before offering you a loan. If you already have established business credit, that’s ideal—but what if you’re just starting out?
In lieu of business credit history, lenders will consider your personal credit history. Do your best to make all payments on time and pay down high balances. Monitor your credit report regularly for accuracy and to see where you can make improvements.
2. Collateral or Assets
Most lenders will require collateral in exchange for the funds they’re providing. Common examples include a vehicle, office building, or business equipment.
Ideally, your collateral will be returned to you once you’ve repaid the full loan amount. If for some reason you’re unable to complete the repayments, the lender may sell your assets to cover the amount owed.
3. A Solid Business Plan
The final piece of the installment loan puzzle is a well-written business plan.
Why should the lender help you? How much do you want to borrow? What assets will you pledge as collateral, and what’s their fair market value?
Your plan also needs to prove your business will have the ability to generate the cash flow necessary to pay back the loan. Depending on the amount you wish to borrow, you may also need to include a guarantee of personal assets (your home, for example).
Online Installment Loans: Final Thoughts
Cash flow is a challenge for many small business owners, but help is available.
If you need cash to fund your startup venture, an online installment loan could be the solution you’re looking for. But before you apply for one, prepare a comprehensive business plan to know how much you would need so you don’t end up borrowing more than you require. This gives you an estimated installment payment amount that you would be paying after getting the loan.
You now have a rough idea of how much business you will have to generate to pay back the loan and still have enough profit left to invest further.
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