Published on January 6, 2017
To Take Or Not To: The Pros And Cons Of A Business Loan : To Take Or Not To: The Pros And Cons Of A Business Loan Slide2: In the current economy one does not need a finance degree to know that surviving financially is a tough job. Companies have gone bankrupt while most people are unemployed. In an economically fluctuating environment, business loans from banks seem to be a helping hand for businesses. But before applying for a business loan, it is better to go through the pros and cons so as to make an informed decision. The most popular type of business loans that are usually sought after, are the commercial business loans. Pros of a commercial business loan • Low interest: Amongst all the loan options, commercial bank loans offer the lowest rate of interest. It helps business owners to access critical funding while ensuring that the overhead costs remain low. • Convenient time: The loans offered are usually long term, between 3-10 years. This allows business owners to pay back the loan slowly while profits in the business increase. • Lower investment risk: Risk of loan default is minimized due to the low rates of interest and extended plans of payment. Investment risks reduce because of this. • Loan options: Commercial loan comes with the option of two types of loans-secured and unsecured loans. Slide3: Advantages of secured loan At a lower cost, a much more substantial amount can be borrowed which helps your business become stable. The repayment period is much longer which helps reduce the monthly charge Advantages of unsecured loan Unsecured loans are easier to sanction as they do not require any sort of collateral in return The period of loan completion is much more faster as there are no collaterals to evaluate and are usually borrowed in small amounts Rightful ownership : The ownership of the company remains in the hands of the loaned unlike in venture capital investment wherein a fraction of your company is signed over to the investor. Slide4: Cons of a commercial business loan Difficult credit : Qualification for a commercial business loan is extremely difficult, as the one applying for a loan requires excellent business credit. This means that first time business owners will have difficulty applying for the loan without building prior credit . Long application : Making the application process extremely exhaustive is the requirement for a detailed financial report, assessment of projected revenues and clear mention of associated business risks. Slide5: Disadvantages of the loans Secured loan The interest rate on the loan is much higher making it a risky affair even if the borrower has provided security against the capital A secured loan has the potential of leaving you a bit cash deprived, making it difficult to pay other bills Unsecured loan Compared to a secured loan, the interest on an unsecured loan is even higher Qualifying for an unsecured loan is difficult. In case the business has a poor or non-existent credit history, then the application might not be approved by the lender Personal details : To be eligible for the loan, the institution needs to be provided with personal financial history, such as credit score, annual income and debts. Personal autonomy is reduced with a commercial loan as detailed account of the prospective expenditure needs to be provided. Half the sanction : Banks do not give the whole amount asked for as the loan. Usually only about 70-80% of the amount is sanctioned which makes it necessary for the borrower to scout around for other sources. Slide6: Taking decisions about the financial future of your business might seem like a tedious task. In fact, there is no denying the fact that handling finances and the legality involved in such finances takes up most of the mind space. In such situations, you wish you had someone to give your business a push in the right direction. This is where Filingenie comes into the picture. Being a consultancy platform, it facilitates business growth by pointing you in the right direction, whether legally or financially or in any other required way . To gain a better idea about our services, pay a visit to our website or contact us on 869-195-0000. Slide7: Thank You…….