Growing a business is very important and one of the main sources of growth is financing. To have the best chance of loan approval researching the terms and conditions as well as the interest a bank offers prior to applying. The approval process will normally be based on the current financial status of the business and the personal credit history of the owner.
Interest rates will vary depending on the business owner’s credit history and also whether the business owner chooses a fixed or variable rate. Lower rates normally apply to variable loans, but with a variable loan it is possible that interest rates will increase over time. As a small business, it is important to consider this option, since higher loan payments can negatively impact your business. A fixed loan will remain the same throughout the term of the loan, but may be higher.
When applying for a loan, creditors will look at the amount of income the business produces as well as the company’s financial history. The review process will help the bank determine the likely hood of a business repaying a loan. To have the best chance of approval a strong business plan and financial history is required.
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