Starting a new business comes with one chief concern: capital. Not everyone has the luxury of rich parents or interested investors right off the bat. For many such individuals, a business loan is often the only option. However, things are not as bad as they seem. While taking on a loan right at the outset might not look like a great idea but a private business loan can really help your business get off the ground with very little long term impact.
Business loans are available from a variety of sources. You can opt for government loans or private loans. Many new businesses start off with a government business loan and they do appear to be a great deal; interest rates are typically lower than private loans, and government loans are typically unsecured, meaning you do not need to mortgage property or provide collateral in order to receive financing for your business. Government loans may also come with a number of ancillary benefits and incentives in order to increase entrepreneurship in the country.
However, there are a few marked advantages of private loans for businesses over government loans. Here we discuss 4 of them.
INTEREST IS NOT A BAD THING
Competition in the private loan sector has resulted in very low interest rates that are often comparable to those offered by government loans. Additionally, loan interest payments are tax deductible. With private loans, you also get additional options on how to structure your interest; you can opt for floating or fixed rates depending on your particular situation or the current base interest rates. With government loans, you often miss out on these additional options.
FLEXIBLE PAYMENT OPTIONS
Private loans offer a lot more flexibility when it comes to making payments. You can structure your payment schedule according to your convenience. You can also configure whether your payment goes into repaying your loan principal or the accumulating interest. This puts you in control of your finances. You can also adjust your repayment amounts on the fly in order to accommodate your present cash flow situations.
MOBILE BANKING OPTIONS
Most private banks offer some sort of concierge service or a mobile banking app that makes it easy for you to access your financial information on the go. This enhanced infrastructure makes your life a lot easier. You do not need to wait for regular business hours in order to initiate a payment, for instance. You can maintain your own schedule and your own convenience.
CONVENIENT AND TIMELY APPROVALS
Government loans are subject to a large number of prerequisites. With private loans, there is a lot less red tape. Approvals are much faster than with government loans, which means that you can get your business up and running that much quicker. And as anyone worth their salt knows, time is money. Additional add on items such as flexible credit, increased credit, and renegotiation of loan terms are also a lot easier to deal with in a private situation.