You got the business plan done and dusted for the next big thing that is set to take over Australia, but the funds to kick start your start-up are nowhere to be found. There is no need to worry when it comes to finding funding for your business. Here is how you can help kick start your start up with a personal loan with these five handy tips.
What’s not to love about a personal loan?
Starting a business is no child’s play. Getting it out the to the masses to enjoy takes guts. Knocking on lenders doors to can cause you to lose wind in your sail because of the hoops you have to jump through in order to get approved. Most lenders won’t give you the funding if your business has not been around for more than a year. Personal loans on the other hand don’t look at how your business has been performing, but rather how you as an individual manage to repay your loans and your credit worthiness. The only thing you should be concerned about is that your name will be attached to the loan and not your business. Should anything go wrong you will be liable for the payments.
You get low interest rates
A personal loan is great in the sense that you get low interest rates to help you save money that you can use elsewhere to help your business. If you have the negotiating skills to match, you can negotiate with your lender for a lower interest rate. The catch is not to be sweet talked into honeymoon interest rates that seem great at first, but skyrocket after a certain period of time. It is easy to compare your loan online to find the best interest rate that will match your business.
Flexible repayment periods
Having this feature in terms of a personal loan is perfect. A business that is still starting out can have some good days and some bad days. Some business financing usually need a weekly or daily payment. However, with a personal loan you can negotiate with your lender to make repayments on a monthly basis. Should you not be able to meet the monthly repayments it’s advisable that you contact your lender immediately before the time to pay up comes.
Crunch the numbers
Personal loans are usually limited to $50,000. Despite that you can do a lot to help boost your business with it. You can borrow a total sum of up to $35,000 with a loan term that last up to 3 to 5 years. Your credit score needs to be at a healthy 680 and above to apply. There are bad credit loans that are available, but there are usually more restrictions and the amount you are allowed to lend decreases.
Beware of the regulations that are set in place
It helps to know what regulations come with the start-up sector to avoid any delays and disappointments on getting your business moving. The Federal Government’s innovation agenda announced changes in 2016 when it comes to funding related regulations. Some of these regulations include:
- A 5 year exemption from normal reporting and exemption requirements for companies that went public to access CSEF.
- In terms of crowdsourced equity funding (CSEF) schemes, entrepreneurs are allowed to raise $5 million per year from a large number of individuals in return for equity in their company.
- Investors that support innovative start-ups will receive a 10-year capital gains tax exemption for any investments that they have held for 3 years.
To help your business gear towards success you can enlist the service of a financial advisor who will help give you advice on what steps to take next. Always compare your options and research the market to ensure that you get the best deal for your buck. Here’s to a prosperous 2018!