A business loan allows owners access to the capital they need to invest back into their company. You borrow a set amount of money and agree to pay it back, along with interest, over a specified amount of time.
These types of loans can help owners with any business-related activities. Examples of how you can use these funds include: buying new equipment, software, or real estate. Business loans can be used to apply for a patent or even attending a trade show.
The money used from a business loan can work as an investment for your company to help bring it to the next level. Most business loans start at about $10,000 and can go up to as much as $100,000 or more.
To qualify, the lender reviews details around your company’s financials and business plan. They will also take a closer look at an owner’s personal investments and credit score.
You can choose from variable or fixed rates, and there are plenty of pros and cons to both options. A business loan with a fixed interest rate offers predictable payments. Meanwhile, variable rates provide lower loan payments when the prime rate decreases.
Interest rates differ on business loans, depending on the lender, so shop around for the best one. They can also vary depending on your credit score, and a company’s financial situation.
Most turn to a bank or credit union for a business loan. The government also offers a Canada Small Business Financing Loan (CSBFL) program. Entrepreneurs can borrow between $100,000 to $350,00 depending on their needs.
Added features of the program include an interest rate of Prime + 3%. There are also specific eligibility requirements.
If you are a business owner looking to invest in your company, a business loan may offer the capital you need to do this. Create a business plan around where the funds will be allotted.
The last thing any entrepreneur wants to do is borrow money on a wasted venture, only to have to pay it back.