Opening a small business can be a costly venture. But the amount of money needed can widely vary depending on the type and size of the startup. For example, a home based micro business may only require a few thousand dollars to launch, while opening a fast-casual restaurant will usually cost between $250,000 and $400,000, according to Forbes. In general, launching a startup takes plenty of proverbial blood, sweat, tears and dollars.
Fortunately, there is an option that will help people who want to open their own business to achieve their goals—all without draining their savings or straining their relationship with a relative who gave them a loan. A term loan is an ideal way to obtain small business financing in a way that will not break the bank.
What is a Term Loan?
In a nutshell, a term loan will give the business owner a lump sum of money up front that he or she will then pay back at predictable times over a certain amount of months or years. This type of small business loans can be tailored to virtually any type of startup — from a taco truck or hair salon to a bakery, clothing store or computer repair company. The money from a term loan can be used to buy equipment and supplies, hire staff and for pretty much any of the myriad of expenses that opening a small business entails.
Is a Term Loan Always the Best Choice?
Like many things in life, a term loan does have its inherent pros and cons. For example, some term loans include a penalty for an early payoff. This means that when a new small business takes off and does really well, the owner may not be able to make larger payments to get rid of the loan sooner than originally planned. In addition, this type of business loans may be difficult to qualify for at times; some banks may ask for collateral, or they may not want to offer a fixed rate.
In general, however, a term loan is an outstanding option. Borrowers can usually get approved for one despite the fact that their FICO scores may not be exceptionally high — this makes them ideal loans for businesses with no credit. Monthly payments are predictable and usually on the low side, which allows for business owners to plan ahead and budget their income. People who wish to apply for a term loan should look for financing solutions that are quick and stress-free. For instance, Zinch offers small business loans that are easy to understand and can be applied for online, as well as fixed payments that are established from the on-set of the loan. In addition, Zinch is devoted to helping small businesses thrive.
Term Loans are the Way to Go
Opening a new business can certainly have its share of challenges, but with the help of a term loan, having adequate funding will not be one of them. Rather than running up charges on a personal credit card or asking a friend or family member for money, applying for a term loan will allow entrepreneurs to go from merely dreaming about owning a business to planning and then hosting its grand opening.
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