If you plan on starting a business, or perhaps plan on keeping a business going, by taking into consideration different types of loans, then it’s important to understand the ramifications of each possibility.
Five types of transactions that can have an effect on your business financial possibilities include dealing with student loans, small business loans, loans from family and friends, private loans, and then the choice to take on credit card debt as a form of self-loan. Each movement of money with respect to these categories has its own pros and cons, especially if you have business matters sitting in the background of the decision.
Before you move forward with a business plan, you at least have to consider the presence of a student loan that you still haven’t paid off. It may be that you’re even trying to start the business in order to make enough money to pay off that loan in the first place! Having debt from school and working toward business profits aren’t mutually exclusive options. However, choosing to consolidate your student loans first isn’t necessarily a bad idea, just in terms of making your own repayment processes simpler.
Small Business Loans
Another type of loan to consider when trying to start a business is the classic attempt to apply for a small business loan. Depending on how good your business plan is, the industry you are trying to get into, and the details regarding the amount of the loan, this is a good way to get your feet wet and determine if your ideas are economically feasible on a basic level.
Loans From Family and Friends
Another route to take when it comes to moving along the path to your business financial goals is whether you want to borrow money from friends and family. Honestly, because there are less legal concerns and no built-in interest rates this way, it can be the best way to get cash fast in a manner that has more social implications about when you need to pay it back rather than legal ones.
Outside of business loans, student loans, and personal loans in your inner circle, private loans are also an option. These often have the most risk associated with them, and the highest interest rates, but the benefit is that there are often fewer questions and more money you can get quickly, regardless of your financial background.
Taking On Credit Card Debt
And finally, you can put business expenses on a credit card in a pinch if you need to, sort of giving yourself a ‘self-loan’ with the understanding that you’ll be paying it back as soon as possible to avoid the potentially very high interest rate that you’ll be accruing monthly.