Startup Loans: Get a loan to get another loan?
I talked with several people lately who not been able to find startup money from a bank without collateral. So they borrowed the money for the collateral. At over 11 % interest. Yikes!
I see several problems with this scenario. First, this new loan goes on your credit rating. Unless you have fantastic credit (above 750 probably), it will lower your credit score. Second, you will now have to pay back two business loans instead of one, that is, the loan you just took out for collateral and the second business loan from the bank.
Why not just get a low-interest rate credit card and use this for your business startup expenses? Am I missing something here?
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There are alternative financing methods that allow businesses to get cash and cash flow without adding debt to their balance sheet. It’s called a cash advance,
You could get cash advances on A/R Invoices or Credit Card Sales Volume. Another cash flow strategy would be to get an equipment or a commercial vehicle lease – instead of coming up with a lump sum of cash for purchase.
These are not the lowest priced options for financing your business. but don’t rule out this type of solution. It’s easier to qualify for cash advances than for other types of funding. And it often makes sense for companies in growth mode.
If you think we can be helpful call 404-374-3384 or email cashflow@NobleAdvantage.com.
You might want to look at my article about the benefits of factoring at http://cashflow.nobleadvantage.com/benefact.htm.
BusinessOver50.com