Getting a Personal Loan to Start Your Small Business

Although most people are fine with the traditional keeping their savings in their bank accounts, there are others who believe in making their money work for them—not just by preserving it, but increasing its value through business and investment.

Investments don’t just mean stocks, mutual funds, or real estate. Starting a small business is also a form of investment—but that which requires more time and effort on your part. It presents a lot of advantages in that you’re given optimum control of everything that goes on and directly benefit from your business returns. If you don’t have enough funds to start your small business, you’d most likely need the help of a bank or any personal loan lender.

Getting a Personal Loan to Start Your Small Business

Here are some of the things you need to remember if you’re interested in establishing a business:

1. Follow your passion.

The most important thing to consider before starting a business is to find something you’re passionate about. Richard Eldridge, co-founder of Lenddo, an online platform for applying for personal loans, advised that passion should be the main reason behind building a startup, and not the money. It’s the only way you can feel rewarded for all the time and effort you spend—and there’ll be a lot—building a business from the ground up; making decisions, resolving issues, and constant improvement.

2. Decide on how much capital you need.

After you decide on what kind of business you’d like to build based on your passion, start making a business plan and find out how much you exactly need for capital funds. This helps you determine the loan amount you’ll need to apply for.

3. Prepare necessary documents.

Depending on the personal loan lender you plan to approach, you’ll need to prepare various documents for your loan application. You may have to submit a business plan, bank statements, tax returns, and other financial documents, as well as cash flow projection of the business’ income and expenses, and a complete breakdown of existing capital and collateral. The bank or lender will need these documents in assessing the risk of granting you a loan.

4. Know your options.

If you feel that a business loan is what you need, there are quite a number of local banks willing to lend aspiring business owners like you capital funds. Debt financing doesn’t entitle the lender to have equity in your business. You’d only have to pay back the loan within an agreed term, with interest, which varies according to the bank.

5. Don’t be afraid to start small.

You must be feeling pretty excited about your business idea and feel that nothing could stop you—until you come face to face with the reality that before you start earning a profit, you’d have to spend some money first. Don’t fret, it’s something that all businesses have to deal with. No matter how small the capital you manage to raise, there’s always a smart way to work with what you currently have. You need to closely monitor your expenses, make sure to conserve your resources and have a lot of patience of course.

We hope that the tips mentioned above have provided you with a clearer picture on how to establish your product/service in relation to applying for a loan. To find out which offer has the best personal loan with lowest interest rates, check out online comparison tool free of charge.

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This contribution is exclusively written for CebuFinest.com by MoneyMax.ph, the Philippines’ leading financial comparison portal which helps Filipino consumers make the right financial decisions as they settle on the best credit card, home loan, broadband plan, and more—fast, comprehensive, and free. Please do check their website to learn more.