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  • 4 Mistakes to Avoid When Applying for Small Business Loans

    4 Mistakes to Avoid When Applying for Small Business Loans

    The truth is that if you are an entrepreneur, it doesn’t just require you to have a working business idea; however, it also relies on how you raise the capital. Talking from a realistic perspective, no business can start or expand without enough money. Often, business owners (small business) face financial difficulties, which push them to let go of what possibly could have turned out being a worldwide changing idea.

    Now, many financial institutions are ready to finance and support brilliant ideas of entrepreneurs through small business loans, but you can just get financial backing if you are able to represent yourself as a strong business package.

    Not all financial decisions take place in a vacuum. Today, banks conduct a thorough assessment of the applications they receive before they proceed with an approval. In such a case, unfortunately, so many small business owners end up missing these loans and this is all because of poor business ideas, and a lack of clarity on their business loan application.

    Know that even a single mistake you make in the application could decline your request for a loan. In many cases, this is because the lender may not examine some information or loan application requests. However, if you wish to avoid rejections, then here are some of the common mistakes you should watch out for when applying for small business loans.

    Having Outdated Financial Records

    A common mistake that most small business owners make when they seek a loan from their financial institution, such as Aurumfi, is not taking more time to work on all their financials. All banks need to require you to provide this information in order to determine exactly how stable your business actually is before you risk investing money in it.

    In this case, if your aim were to work on expanding your business, then any financial institution would want to make sure that your business is stable enough to repay the loan when the time comes, or whether it can sustain itself in the future or not. The information you provide regarding the business has to be tangible and clear.

    Since most loan providers demand this information, small business owners end up creating figures to please the bank, forgetting that the bank still verifies the information you provide on the application. Eventually, this leads to denials of the loan verification process as it shows different figures from the one you provide. The right decision is, to be honest with the information you fill in the applications and you will increase your chances for loan approval.

    No Clear Use of the Funds

    Any organization you choose, lending the loan would keep a keen eye on exactly how you as the applicant plan to use the funds to boost the success of the business. Unfortunately, another common mistake that small business owners make is not having a clear and well-described idea of how they should spend the money that they request. Eventually, this leads to denials of loans by most lenders since the lender will not be able to know whether you can repay the loan with the interest.

    The lender wants to know that you spend the money on the right things that will improve your business position. They want to see all your business needs and evaluate whether the amount you wish to borrow is enough to meet all your needs.

    As the loan borrower, you have to show the lending party that if you receive the loan, it will improve the performance of your business and create a good impact. Ensure that your points are clear and the benefits you wish to get with the finances you that you qualify for in the days to come.

    Late Application of the Loan

    So many businesses wait until it becomes too late for them to submit their application for the loan. Usually, this happens when they are desperate for the business funds. This is something that makes them go for any offer. At such times, some of the offers that the small business owners take up turn out with higher interest rates and unfavorable terms. In order to avoid all these, you should take some time and search or the best loan providers or people who can help you make the right decision. Before you make a choice, however, do it slowly, and give yourself enough time to evaluate the different choices that you need for the growth of your business.

    Applying for a Wrong Business Loan

    From the view of a financial expert, before any owner applies for the loan, they need to consider the capital that they need and the right type of loan that works for your area. Before you apply for a loan, you need to know there are different types, meant to cater to different needs of your business and hence if you wish to borrow, you have to match your needs with the right type of loan.

    This simply means that if you apply for an inappropriate loan, this could end up costing you much more on the interest rate. Hence, it is always advisable that you do a complete research on the right type of loan available, one that matches your business needs, to reduce the chances of encountering a rejection.

     

  • Why Payday Loans Are a Good Emergency Cash Source

    Why Payday Loans Are a Good Emergency Cash Source

    Payday loans have a bad reputation and movies have seen them associated with shady figures extending cash advances to desperate people to help them out of a fix. The payback in this Hollywood context is usually to menacing loan sharks coming to collect with some force.

    But nothing is further from the truth with modern payday loans and many reputable lending institutions are prepared to help you with minimal hassle and fuss. They are a good option for sourcing emergency cash for those with bad credit records or a poor credit score.

    There are a few myths about payday loans that prevent those in need from even considering them as an option. So here are a few facts to bust those myths about payday loans:

    Myth 1: My reason for a payday loan isn’t good enough

    The fact is the folks you’re asking to lend you money won’t be asking what you want it for. Nope, you don’t need to give them a reason, and there is no requirement under any consumer laws for you to state why you need a loan. What you do with the cash is your business, whether you’re using it for Christmas shopping, a holiday, urgent dental work, car repairs or spending it on groceries. No one is going to judge you on the other side of your application.

    Myth 2: I won’t get it because I can’t pay it back by the next payday

    You can extend a payday loan and pay it back the payday after next. If you negotiate the payback terms, it will usually cost you extra, but it can be done. But do try to pay the debt back as soon as you can and don’t consider a payday loan if you’re already in a big debt hole.

    Myth 3: I’ll never get a payday loan because of my bad credit record.

    You’re wrong. Most lending institutions offering payday loans won’t carry out a credit check, and if they do so, it will be only to determine your fee and the rate by which you pay them back. Remember, if you had a good credit score there would be other products on offer to you, and you wouldn’t have to consider a payday loan.

    Myth 4: I don’t own assets.

    This doesn’t matter because your monthly wage acts as your security. If you fail to pay the lender can apply for a court order to ensure your employer pays them before they pay you.

    But what you do need to qualify for a payday loan is a permanent job and an active bank account that your salary is paid into. Also, your loan will be paid into your bank account so having one is a prerequisite.

    Look for responsible financial institutions that are affiliated with member organisations and comply with government credit regulators during your research. An example of such a lenders are lender who offer emergency loans for people with bad credit records or a poor credit score.

    The internet is the best place to search, and most good lending institutions will state their credentials and track records on their websites. They will even feature testimonials from satisfied customers.

    The lender will list its criteria and would want to know that you’re in permanent employ and earn a set amount of cash per week.

    To qualify for a payday loan from most lenders, the criteria will require that the applicant is at least 18 years of age, lives in the country where they do business, and has an active bank account where funds are regularly transferred electronically, among other. You will also be required to provide some form of ID as part of your application.

    Responsible lenders will remind you that if you already have debt, then you shouldn’t be adding to your burden by applying for a payday loan. They advise you to rather turn to debt counselors for assistance than to opt for an unsecured loan like a payday loan.

    Remember, the person arranging your loan is not there to judge you so don’t worry about them digging into your files and exposing your credit history. You will also be able to negotiate more flexible repayment options or extend the due date if you encounter any problems while repaying.

    As long you bear in mind that extending the terms of a payday loan will cost you extra in fees. Also, bear in mind that a payday loan is going to have a higher interest rate than a secured loan.

    Use a service to get quotes from four reputable lenders within minutes, you can have cash in your account within an hour by simply completing an online application form and providing the documents required to meet the lender’s criteria.

    Author Bio:
    David Giltner is a Senior Content Marketing Specialist. His long experience as a blogger made him an expert on different niches like technology, finances and home improvement.