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Your First Business Loan: 7 Tips on Getting the Best One

borrower getting cash advance

 

Congratulations on considering getting your first business loan!

This step typically means you’ve been in business for a while, have sustained profits and are providing needed products or service to your community. You’ve beaten out 95% of other business owner wannabes!

Most likely, you’ve gotten here by taking careful, conservative steps. Continue your careful habits by researching the smartest ways to get your first business loan.

1. Understand Your Options

While you’ll certainly be grateful for receiving your first business loan, keep in mind that you’re providing valued business for a lender as well. Take the time to see how you can get the funds you need at the lowest rates and best terms.

Business financing comes in many forms: business loans, business credit cards, business line of credit and invoice factoring. Another instrument, the merchant advance is an early payment of the income you regularly receive through credit and debit cards. It’s typically a quick turnaround, paid back to the lender once those monthly funds come in. Understand the needs of your business and/or industry before you jump on the decision of getting a business loan.

2. Analyze Your Credit

A business’s credit rating dictate the interest rates of any loan you consider. Your business credit score and personal credit score both impact the lender’s decision. Personal credit scores indicate how well you handle money. Cash flow, expenses, and assets all figure in to how much a lender will approve and for what rate. The sources lenders use to determine your interest rate also vary. For example, Dun and Bradstreet will take nothing but your payment history. Experian and Equifax consider public records, legal filing and collection agency.
Those with a low credit score can get a business loan, but their options are limited.

3. Shore up Your Business Credit Score

Hopefully, you’ve avoided mixing your personal and business finances. Overlapping accounts complicate your business loan eligibility and even your taxes. The earlier you establish a separate business account, the better, as you build a business credit history this way.

4. Improve Your Credit Score Before You Apply

Review your credit report and settle all overdue bills. You can even consider consolidating your credit card balances into a personal loan, a move that impresses the credit bureaus and lenders because you’re paying off a higher level of the capital on a regular basis. The personal loan sends the signal that you aren’t looking to a bankruptcy filing to escape your debts.
Reducing your credit balances also improves your credit score, particularly if you use only 30% of the credit banks are willing to lend to you. Also, do not close an account just because you’ve paid it off. Keep that credit line open.

5. Make a Specific Request

When applying for a business loan, borrowers get farther when they know their numbers (as anyone who watches Shark Tank knows well.) Be ready to show the lender the figures behind just how much money you need to accomplish your goals and what those goals will do for the business. This is also where a thorough business plan can come in handy.

6. Study Financial Statements

Prepare the business’s income statement, balance sheet and statement of cash flow. After this you can prepare the documents like tax returns and financial statements. Lenders will demand all of these documents to determine whether you can pay the principle and interest over a period of time.

A+ Rated First Financial Specializes in Business Loans for ALL Credit Scores

Ready to get the money to hire a new employee, acquire crucial materials or open a new branch? Apply with First Financial for a business loan and a representative will contact you within 24 hours to answer all your questions. Our automated systems and lower marketing costs translate into lower rates and fees to the business borrower. We’re proud to provide the funds America’s small businesses need to propel the economic recovery and employ others.

The Feasibility of Bad Credit Auto Loans: 5 Facts that Reassure Spouses and Parents

skeptical woman

Have you seen this face?

If you’ve just heard you can only qualify for a “bad credit” auto loan, know that you are far from alone. More than 50% of Americans today DO NOT fall into the “prime” or “excellent” credit category that wins the best interest rates. Many gasp upon hearing the word “bad” in the description of their only possible auto loan, but rest assured, the bad credit auto loan is simply another category of frequently approved loans.

In fact, in the first quarter of 2014, U.S. banks approved 44% more bad credit auto loans than they did in the same period the previous year. With the economy improving, banks are more willing to take on customers with less cash at hand. (First Financial’s bad credit auto loan has a 93% approval rate.)

With the negative power taken out of the term “bad credit auto loan,” the next step in getting a reliable, attractive car is convincing the spouse or parent who may be co-signing, helping with down payments or monthly payments. We’ve made sure to add all the statistics and links so you can back up your case.

Bad Credit Auto Loan Interest Rates Are Higher But Not Outrageous

. . . and definitely NOT unheard of

Financial talking heads on television or radio can sour your significant other or another important family member on the bad credit auto loans. Sure . . . . those in the prime or “excellent” credit category get the lowest auto loan rates, but paying 7% to 10% or more for an auto loan still keeps reliable, attractive cars affordable.

Further, during some periods of the past 50 years, even those with excellent credit were paying over 10%. Ask a parent or grandparent what they paid for an auto loan at various times. Show them that you have proof that interest rates peaked in 1981 at 16% and only dropped under 10% as recently as 1997.[2]

Getting a Bad Credit Auto Loan Helps You Get to Better Credit

That you make payments on time monthly gets reported to the credit bureau, slowly raising your score over the next months and years. Once your credit inches up into the “fair” category and then even the “good” category, you can consider refinancing at a lower rate.  And all that time you had a reliable car.

More, having reliable transportation to a job is a sure way to get the money needed to be a better bill payer. Many jobs even insist you have your own car. Stress to loved ones that you consider the higher interest bad credit auto loan a temporary fix while you work your way out of a negative credit picture. Maybe landing in the bad credit category taught you some important lessons, mistakes you don’t want to repeat.

Find Out How Much You’re Approved for Fast with First Financial

Banks are now more willing to lend to those whose credit scores dropped below “prime” or excellent . . . 700 or higher at this writing.

Our fast and simple online auto loan application and mobile auto loan application can get you driving within days. Want to get tips on finding the  lowest cost online auto, mortgage, personal loans as well as the loan industry? Please “like” us on Facebook today!

5 Common Mistakes to Avoid when Getting a Personal Loan

 Don't waste your money on penalties and fees!

Don’t waste your money on penalties and fees!

Between mortgages, car loans and department store cards, nearly every American has borrowed money at one time. The federal U.S. government is indebted to private lenders and other countries to the tune of 15 million dollars. States owe each other and their citizens in the form of bonds. If you need a personal loan to help you with education, an emergency, medical expenses and more, you have lots of company.

Since the loan will be amortized or spread out over years, every point of interest saved helps. When considering a personal loan, make sure you don’t make the following common mistakes:

  1. Applying only at your bank or your neighborhood banks.  Both credit unions and online banks offer lower rates and better terms because they spend far less on marketing, human labor and overhead. Many of their processes are automated. All those saved costs allow them to offer lower personal loan interest rates.
  2. Not knowing eligibility terms and incurring dings to credit. Every loan officer must check an applicant’s credit during the approval process. If you apply for loans that require excellent credit score when you only have a fair credit score, you won’t get the loan and your credit score will be impacted.  Some people apply for so many loans that they ruin their chances of applying for anything!
  3. Agreeing to the first loan terms offered. Most loan officers have some wiggle room on interest rates and terms. It’s important to at least attempt to get the numbers more in your favor to increase the chances that you’ll be able to repay on time.
  4.  Borrowing Money You Can’t Pay Back.  Asking for more than what you really need can get you into trouble. The interest on the extra builds up, raising payments and interest in a selfperpetuating cycle.
  5. Rushing through the fine print in the contract.  To avoid late payment penalties that could swell the principle, make sure you know the loan’s terms:
  • Amount of interest
  • Maximum debt
  • Penalties for skipping payments
  • Penalties for late payments
  • Length of loan

Get a Personal Loan Safely Online with A+ Rated First Financial

An online bank, First Financial provides a quick application that you fill out in the comfort of your home. Once you’ve been approved, the cash usually appears in your account that evening. To get daily financial tips remember to like our Facebook page.

 


First Financial

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Client Service Center: Main: 1-800-315-7791 Fax: 1-800-215-0217 (Monday–Friday 5:00am–6:00pm Pacific or 8:00am–9:00pm Eastern)

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