By: Michael Brian
Small business is one that is organized for profit and also contributes to the economy by way of paying taxes and employment opportunities. A small business may be defined as a business with a small number of employees. The legal definition of small business often varies by country and industry, but is generally under 100 employees. These businesses are normally privately owned corporations, partnerships, or sole proprietorships.
Whether the business is small or big, it needs fund to carry on its operation, because the returns in business are not stable. Sometimes the company or a firm can have huge profits; at times, it can have losses too. Nevertheless, in the period of financial depression, every business needs a financial help to support in its working.
On comparing small business with big business we find that the need of funds more often arises in the former case as the returns are not constant. Financial crisis in the company can affect the working adversely. Therefore, to stop the effect of this financial crisis a small business can rely on loan for assisting them in need of funds. Small business loan helps them to come out of this situation of crisis. Small business loan can also be used for starting a new venture.
Although small business firms are considered backbone of the economy, but getting a loan for small business firm is not an easy task. Lenders think number of times before lending a loan to the borrower as risk involved in small business is huge. It involves numerous formalities such as giving proof of income that depicts your creditability. Your credit history also plays a crucial role in it. The person with good credit history is always benefited in applying for a loan.
The most important factor that the small business owner should consider before going for a loan is flexibility in repayment. As most small businesses would experience irregular income for some period, so the flexible payment will help in making those repayments easier.
There is also an increase in the number of sources available for funding the small business. Traditional lenders like banks and financial institution also provide loans. In addition to that, loan can also be applied online, which also provides you three benefits
•Fast: you have to just fill a form and get an instant match
•Easier: it makes comparison easier between various lenders available in the market
•Flexible: choose the lender which suits your needs.
The rate of interest charged in small business loans is generally higher since there is threat to the lender about non-payment of installment on time. Therefore, one can trust small business loans for their dream project.