Weigh All Your Options When It Comes To Obtaining A Small Business Loan

Online, April 10, 2011 (Newswire.com) - If you want to grow your small business, you're going to need cash. Whether you are a startup, a sole proprietorship, or a limited liability corporation, getting a small business loan will be one of your top priorities if you are looking to expand your business.

But before you can borrow money, a lender will look at both you and your business to see if you're a viable borrower. Most will look at our company's history, business credit, revenues, balance sheet and your equity contributions. If you pass a credit check and the lender sees you have a healthy business, most lenders will also require an additional guarantee the loan will be repaid. This is called collateral.

Collateral is defined as an additional form of security that can be used to assure a lender that you have a second source of loan repayment. Be realistic when applying for a business loan - you need to make the right decision about what you offer up as collateral to any lender. You should also consider the risk of defaulting on a loan, which could have harsh consequences for you and your business.

So - how do you go about using collateral in the right way to secure that business loan? First of all, keep detailed records of your asset's worth, even if you have to hire an appraiser to give you an idea of how the lender will value it. You should also be aware of what you can use as collateral. There are two types of collateral: assets you own and assets you have a loan against. The collateral you own will obviously get you a more favorable result.

Be realistic about your company's needs, and how your company will use the money. If you're a qualified borrower with good business credit, you should be able to secure the loan you need.

You may also wish to consider peer-to-peer lending, which is quickly becoming an effective way for small businesses to drum up cash in a hurry. This type of loan has far less red tape and often takes much less time to secure.

Whatever route you choose to obtain a small business loan, weigh all your options carefully and realistically.