Are you looking to expand your business but don’t have the working capital? If you’re struggling with a lack of funds, it doesn’t have to put a halt to your expansion plans. It’s common among business owners to use borrowed capital in funding an immediate financial need or any business venture.
Companies can borrow money just like individuals. When it’s time for your business to seek financial assistance, there are many sources of debt financing you can turn to. But one option that’s often overlooked is installment loans.
It’s a type of loan that provides you with a fixed amount of money you need to repay in installments over a prearranged period. Part of each installment loan repayment consists of paying back the loan principal and the other portion for the interest.
But why should you apply for an installment loan to fund your business? Below we’ll walk you through how your business can benefit from an installment loan.
Higher Loan Limits
While short-term loans like payday loans are an excellent option for covering an emergency expense, they won’t help you make big purchases for your business. These loans usually only allow you to borrow up to $1500.
But with installment loans, you can access higher loan limits as long as you meet the lender’s requirements. An installment loan will benefit your business if you need a considerable amount of money.
Manageable Monthly Payments
Scaling your business takes a lot of expertise, time, and money. During such periods, you need to maintain a positive cash flow. When you acquire an installment loan, your monthly payments are fixed for the duration of the loan. This means you know beforehand when your payments are due and how much you should pay.
With a fixed rate and term, you can better manage the loan repayments without worrying about going overboard on your business expenses. It also helps eliminate the cash flow fluctuations that often come with variable-rate loans, where the interest rate changes.
Flexible and Longer Repayment Terms
The repayment terms of installment loans are predetermined. However, it’s also flexible, meaning you can choose a repayment schedule that fits your business. You don’t have to struggle to look for enough funds to pay your debt immediately.
If you think your business needs more time to repay the loan, you can opt for a longer repayment term. You can pay off an installment loan for up to 30 years, depending on your borrowed amount.
A Variety of Purposes
You can utilize an installment loan for a variety of things, including launching or expanding a business. Since installment loans come in multiple forms, you have a great chance of finding what your business needs. These can be hiring additional employees, purchasing new equipment, or making improvements on your premises.
Below are the most common types of installment loans you’ll come across:
- Personal loans: This is an installment loan you can use for almost any purpose.
- Auto Loans: This is a secured type of installment loan which you can use to buy a vehicle.
- Mortgage Loans: This installment loan is secured and can be used to fund the purchase of a house.
Grow Your Business With an Installment Loan
Whether applying for an installment loan is the best option depends on your company’s financial situation and needs. But this type of loan is beneficial because they’re often easier to access than conventional loans from banks. Thus, funding additional business expenses with installment loans might be a great option if you want some financing with little waiting time.
