Did you know installment loans can help you in the early stages of financing your business? Learn how to use business installment credit here.
Businesses need money to rival their competitors. Period.
But if a business doesn’t have the funds readily available, then what should they do?
Cue, installment credit to the rescue.
If this isn’t on your radar, it should be. Luckily for you, we’re going to discuss how to make the most out of this line of credit.
Does that sound good to you? Excellent! Let’s dive in!
What’s an Installment Credit Loan?
An installment credit loan is a purchase where the borrower takes possession of an asset, and the funds are paid back by the borrower in installments (usually monthly) over the time specified in the loan agreement.
With installment loans, the number of re-payments is fixed, and the repayment period is often discussed between the borrower and lender. Usually, this is paid off over a few months or years.
An installment loan can be very beneficial to businesses who require funding quickly.
So, with that in mind, let’s delve into the meat and potatoes of this post.
1. More Borrowing Options
An installment loan differs slightly from other types of loans. Namely, because it allows a business to borrow more substantial sums of money at a lower interest rate. This opens up a whole suite of options that other loans might not offer you.
Be sure to really think about how much you need and what you’ll spend the money on. You’ll want to plan ahead. Don’t secure a loan, splurge the funds, and not have any ROI to show for it!
2. Regular Monthly Payments
The monthly repayments on your loan are unlikely to change throughout the payment term once the lender sets it. As such, it’s easier for businesses to budget their repayments. Your loan agreement will lay that all out for you.
So, take advantage of that and be ready! Make sure you’ve put enough money aside. The last thing you want is to get to the end of the month and not able to pay what you owe!
3. Easy Application Process
Unlike some loan processes, applying for an installment loan is straightforward and easy to do. There are two ways to apply for an installment loan:
- In-person
- Online
An application form will need to be filled in, and the lender may require documentation to process it, but a decision is (usually) made the same day.
4. Get Your Money the Same Day
Let’s circle back a second to what we just said about same-day approval.
Installment loan companies generally provide same-day payments, i.e., on the day the loan is approved. So, there’s no waiting around for the money to be transferred into your account.
You’ll be up and running from the get-go. As soon as you receive the funds, you can spend it as you wish! This is the main reason why this kind of loan is beneficial for businesses in need of a significant cash injection, fast.
5. Options for all Credit Ratings
If you have a poor or zero credit rating then getting a loan can be tricky, but with an installment loan, this isn’t the case.
Installment loans allow those with a poor (or zero) credit rating to be considered for a loan. All you have to do is prove you can afford the monthly repayments.
6. Head to Bank and Credit Unions
When it comes to taking out an installment loan, the best places to start looking is with the banks and credit unions. Failing that, you could also consider’ Small Business Administration’ guaranteed loans.
However, you should note: The SBA isn’t involved in the lending. Instead, it acts as a co-signer. As such, this adds credibility to your loan application which increases the likelihood your company will qualify for the loan.
Alternatively, if you have any friends or family members willing to loan you the money, this is another route to consider. But, the majority of us don’t want to mix business with pleasure; this can sometimes lead to awkwardness later down the line! If you do decide to borrow money off friends or family, do so with the assistance of an attorney.
7. Build Your Credit Score
Last but not least, you can also use an installment loan to boost your credit score. Just ensure you make your repayments on time. As you may already know, the biggest influence on your credit score is your payment history.
Ergo, by creating a record of on-time repayments, you’ll bolster your score. Conversely, if you make payments more than 30 days late, you run the risk of severely hindering your credit score.
The moral of the story is, only take out what you can afford to pay back.
But, it’s not just paying on time that boosts credit, it’s also good to have a mixture of different accounts and loans. Say, you only have credit cards at the moment, adding an installment loan helps shake things up. Consequently, you may see a small surge in credit.
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Thinking About Applying for Installment Credit?
Sometimes businesses run into problems and encounter unfortunate and unforeseen circumstances that require an injection of cash.
This can be anything from broken computers to a shortage of cash to pay suppliers. Installment credit can provide a business with quick and hassle-free funds to help them get back on their feet.
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