Cheap Business Loan

Cheap business loans are low interest rates which offer a discount in interest costs to the borrower. They can be obtained a number of ways, through common lending institutions such as banks and credit unions, through private lenders, or over the Internet. They are usually short term, allowing the borrower to accumulate less in interest fees throughout the life of the loan. The interest rate is based on the borrower's credit score, collateral, down payment, or funding purpose. There are also programs that allow businesses to apply for a cheap business loan if their business falls into an approved industry category.

The best way to get cheap business loans is to make some sort of collateral available. This collateral can be used as a down payment, or to secure the contract. Many lenders will not want to make a contract available to someone looking for 100 percent financing. If the borrower requests a 50 percent financing and offers the other 50 percent as collateral security, the lender will be more likely to offer an extremely low interest rate.

If the borrower would like to receive the lowest interest rate possible, he should make sure that his personal FICO score is high. A FICO score is a personal credit report score. Lenders determine interest rates based on this number. There are ways to lower the interest rate even further, but the FICO score is a starting point. The higher the FICO score, the lower the interest rate. The lower the FICO score, the higher the interest rate. It is recommended that any prospective borrower, who wishes to apply for any cheap business loans, first obtain a copy of his credit report from all three nationally recognized credit reporting agencies.

Collateral, that is commonly used to secure a contract of this type, includes home equity, stocks, bonds, and other large ticket items such as automobiles or boats. This collateral lowers the risk factor a bank takes in granting cheap business loans. The lower the risk for the lending institution, the better chance a borrower has at receiving a cheap business loan. Lending experts advise a borrower to check with the Better Business Bureau for company ratings before applying for any contract. The better the company rates, the more satisfied the borrower will be with the service of their chosen lender.

Short-term borrowing may be a necessity at times, but the Lord warns us about getting into debt. Proverbs 22:7 says, "The borrower is servant to the lender." God wants to be the Master in our lives, but when we get in over our heads with debt, we lose our focus on Him. He wants us to be financially free to serve Him with all our finances. A wise choice is to prayerfully consider the need for a cheap business loan, then if God seems to be guiding in that direction, to carefully and strictly complete the terms of the contract as quickly as possible.

Add to: File Insurance Business article Teen Photo Images