1283: 5 Tips To Find The Right Loan For Your Start-Up Business by Courtney Luke of Arrest Your Debt

[00:00:00] This is Optimal Work Daily, episode 1283. Five Tips to Find the Right Loan for Your

[00:00:05] Startup Business by Courtney Luke of arrestyourdebt.com. And I'm Dan, I'm your host here and I am with

[00:00:12] you every single day giving you these tips from our great bloggers on work-life balance,

[00:00:18] entrepreneurship, and so much more. So with that, let's get right to it now as we optimize your life.

[00:00:24] Five Tips to Find the Right Loan for Your Startup Business by Courtney Luke of arrestyourdebt.com

[00:00:35] Running your own startup business can be overwhelming. You have this need to share

[00:00:39] your services with the world, but finances and juggling a million different responsibilities

[00:00:45] can make that feel impossible. This is especially true when it comes to finding the right loan

[00:00:51] A loan can jumpstart your business, but you can end up with even more stress down the road if you

[00:00:56] make the wrong deal. Here are five essential tips to help you find the right loan for your startup

[00:01:01] business. Determine the type of loan you need

[00:01:06] The first thing you need to do for your startup is to determine what type of loan you need.

[00:01:10] They are not one size fits all and the unique needs of your business should be

[00:01:14] considered. Here are some common types of loans you may need.

[00:01:18] Term loans These are essentially a one-time loan of cash you will pay back over a period of time.

[00:01:24] You will typically make a monthly payment and your terms may include an interest rate.

[00:01:28] This is the most common type of loan. Business Lines of Credit

[00:01:32] This type of loan does not need collateral. It's more like a credit card with your startup

[00:01:37] being provided with a credit limit from which you can make withdrawals. This type is great

[00:01:41] for someone who doesn't know precisely how much money they need.

[00:01:45] And Equipment Loans

[00:01:47] Let's say you just need a loan to cover a large equipment purchase necessary for your startup.

[00:01:51] Equipment loans specifically help you purchase machinery or equipment as long as it retains

[00:01:56] value. These are just a few examples of the different types of loans and how they can vary.

[00:02:01] By narrowing down the type of loan you need, finding the specific provider for you becomes

[00:02:06] much easier. Determine What You Can Afford

[00:02:10] It can seem like a bit of a letdown, but you need to be realistic about what you can afford.

[00:02:14] This helps to narrow down the type of loan you need and the exact terms you can accept.

[00:02:19] For example, it can be tempting to apply for a big term loan that gives you a large amount of cash

[00:02:24] upfront. However, you need to be pragmatic about the monthly payments and interest.

[00:02:29] The unfortunate truth is that startups are in a dangerous position. You need to bring in

[00:02:33] money and stay in business or risk having a failed startup and a loan to repay.

[00:02:39] Find the right loan for you by setting up a budget and long-term plan for repayment.

[00:02:44] Being honest about what you can afford also helps you avoid getting sucked into a bad deal.

[00:02:48] For example, if you just go into a loan discussion with a wide ballpark estimate,

[00:02:53] you can easily find yourself borrowing too much or agreeing to a bad deal of monthly payments.

[00:02:58] 3. Build Up and Stay on Top of Your Credit Score

[00:03:02] When it comes to making yourself a good candidate for a loan, your credit score is essential.

[00:03:08] Unfortunately, many people overlook their credit score, especially when they want their

[00:03:12] startup business to be front and center during a loan discussion. The reality is that a good

[00:03:16] credit score will increase your chances and that any provider willing to move forward

[00:03:20] despite a bad credit score might not be the right loan for you. You can order your credit

[00:03:25] score for free once a year from any of the following companies. Equifax, Experian and TransUnion.

[00:03:32] So the best thing you can do is improve your credit score and find loans suited to the score you have.

[00:03:38] 4. Find Collateral Ahead of Time The concept of collateral can be scary,

[00:03:44] but you need to be informed on the process to find the right loan for your startup.

[00:03:48] Collateral is essentially one of your assets being promised to your lender for as long as

[00:03:52] you have an outstanding loan. If you can't repay the loan, your collateral will be seized to pay.

[00:03:58] Common collateral includes a fully paid off car, your home or business equipment.

[00:04:03] A general rule is that your collateral must be of similar value to your loan,

[00:04:07] so choosing the right loan for you also means determining the collateral you can offer.

[00:04:11] If you do not have assets that match the amount of money you are requesting,

[00:04:15] it is more than likely not the right loan for you.

[00:04:18] When searching for a loan, determine your collateral ahead of time.

[00:04:22] This helps avoid any spontaneous decisions or entering a promise that you can't keep.

[00:04:27] Think through what you need to keep your startup running if you can't repay your loan.

[00:04:30] For example, your car should not be collateral if your business depends on making deliveries.

[00:04:36] 5. Research Loan Programs For You There are many opportunities available

[00:04:41] for different business owners, so doing some local research can ideally give you good options

[00:04:45] for loans. For example, many lending programs offer assistance for startups owned by veterans,

[00:04:51] women or people of color. If you fit into one of those categories, there could be a great loan

[00:04:56] for you just waiting for you to apply. These are not the only types of programs out there.

[00:05:01] Potential programs can include supporting startups that benefit the local community

[00:05:05] or belong to a specific industry. Unfortunately, the worst thing that

[00:05:09] research can turn up is that you need to go the traditional route for loans.

[00:05:13] At best, it will offer the support and loan preparation you need.

[00:05:17] Find the right loan for you today. With these tips, you can feel comfortable finding the best

[00:05:22] loan for your startup. Once you determine the specifics such as what type of loan you need

[00:05:27] and how much you can afford, the rest starts to fall into place. Of course,

[00:05:31] you want a loan that will help your business soar, so choosing the right one for you is crucial.

[00:05:37] You just listened to the post titled Five Tips to Find the Right Loan for Your

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[00:08:06] And a big thank you to Courtney, whose site, Arrest Your Debt, is a wide-ranging personal

[00:08:10] finance website, yet it focuses on helping first responders and people struggling with debt.

[00:08:16] She founded the site with her husband Ryan, and they've made it their mission to help

[00:08:20] people get out of debt and start building wealth on any income. Since 2009, when they

[00:08:25] started their journey toward financial literacy, they've been featured on MarketWatch, Forbes,

[00:08:30] Fox Business, Experian, MSN, Ladders, and USA Today. So come by arrestyourdebt.com for so much

[00:08:37] more. And again, a huge thank you to Courtney for letting us share her work right here on our

[00:08:42] show. So that is it for another edition of Optimal Work. Daily hope you are having

[00:08:47] a great Friday, and that you'll join us over the weekend where we've got more posts

[00:08:51] and where your optimal life awaits.