Make sure you learn the basics business banking if you have a plan to start your own business. You will definitely need some additional funds whether you are getting your business up and running or when you are ready to grow your business.
You may also need to turn to your bank if you decide to open another physical location, acquire another company, or increase your business inventory. By learning more now, you will have a better understanding of banking processes, which will certainly make things easier for you and your business in the future.
Be honest with yourself
You always take a certain amount risk every time you take out a loan, so make sure you really need a business loan from the start. Before you go to a business bank, take a moment to ask yourself if you need additional capital or is it just better financial management that you need. It’s better to take out a loan with the expectation of a need you have now or will have in the future rather than borrowing out of desperation. If you are desperate, you will most likely accept some of the more expensive business loan terms. If you are trying to grow from a small business to a medium-sized business, chances are that you really need a business loan.
The Most Common Types of Business Banking Loans
Small business owners should also familiarize themselves with two types of loans: short-term loans and long-term loans. Generally, short-term loans reach maturity in a year, sometimes less. If you have a seasonally dependent business, a short term business loan may be just what you need to get through the slower seasons. Examples of short term loans include accounts receivable loans, lines of credit and working capital loans.
It can take seven years for long-term goals to reach maturity, but they have been known to take even longer for equipment or real estate properties. Long-term goals are typically used for larger business purchases, such as office furniture, facilities, company vehicles, and construction.
Other examples of standard loans that business banks may offer small and new businesses include:
Credit card
Equipment rental
Letter of credit
Working capital credit line
Needs and Stages
Check your stage in your business to get a better idea of the type of loan you need. If you need start-up money, then you are in the planning stages of your business. For start-up money, the amount of money you need to borrow can vary because not all businesses require the same type of equipment or location. After your business is up and running for a while, you may need some growth money to keep you going, which may require you to go to major investors and business banks to get your loan.
After you go to the bank to ask for your loan, be prepared to answer questions about your personal character, what you will use the money for, how much financing you will need and how you plan to pay the bank.
To learn more about business banking, go to your local bank and ask to speak to a specialist. Even if you don’t need a business loan or bank right now, it never hurts to learn more if you do.
Feel free to contact Ella Gray with any questions at ella.l.gray@gmail.com.
