Running a small business in Denmark or leading a start-up can sometimes be challenging. Not every first-time business person can get a good grasp of handling their personal credit rates, given that the business rates of the start-up will be visible only after six months (to the least). At that point, many business owners start considering their options for a loan application, but that, too, can be confusing and complex for beginners.
However, the proper pre-planning, organization, and assistance from the online MatchBanker, where you can compare business loans among different lenders, can greatly help you in that field. Furthermore, you can closely examine our in-depth guide below to get all the needed information on what you need to know about loans for small businesses.
LEARNING ABOUT BUSINESS LOANS FROM SCRATCH
Here’s an introductory guide into how business loans work. For a detailed analysis of the key four factors, read below:
Focusing on personal credit scores
As an owner of a start-up, you will lack business credit scores initially (you can get them after six months of running a business). For this reason, you will have to focus on your personal credit scores as the potential lender will undoubtedly check them. Your goal should be to reach high personal credit scores before indulging in running a start-up.
Exploring all types of business loans
Naturally, there are different types of business loans. If you just need to extend your funds, you should look into Business Lines of Credit. If you don’t need a financial loan but rather an extension of your assets, Asset-Based Financing can help, providing you with the proper inventory, machinery, and equipment. When it comes to larger loans up to $50,000 (with an interest rate up to 13%), an SBA Microloan will suffice. For even higher loans, you can choose between Online Term Loans ($250,000 – $500,000) and the Small Business Administration 7(a) loan (up to $5million with an interest rate up to 4.75%).
Preparing documents
Each lender will require a set of documents such as ID confirmation and proof that your business exists. In some cases, lenders may also ask for your bank statements, tax returns, and financial records for other matters. If you’re running a start-up, try to prepare these documents beforehand.
Checking whether the lender is reputable
Unfortunately, not all lenders are reputable, making considering loans even more complex. A good way to avoid making mistakes is to check whether the lender is reputable by reading online reviews and examining their fees, annual rates, and other costs. If the lender has enormous rates, maybe there’s something off about them.
