Business Loans: Broken Down

There are some people who dream of one day owning a store of their own; using their talents or trades and sharing them with others. At Merchant Flow Financial, we are interested in those dreams and strive to make businesses emerge and thrive in today’s market. With our help, small businesses can receive the loans they need to begin and continue their growth. But, with most businesses, you need to begin with some type of capital. Why? Well, if you want to start a business you need three things: labor, location, and tools. These aspects are vital for the survival of a business. Of course, there is also a lot more to a business than just these three things, but most aspects won’t require a loan.
At Merchant Flow Financial, we offer small business loans and equipment financing to business owners. With our help, business owners can gain capital to finance the essential aspects of their business, such as their employees, the equipment needed to complete a product, and to finance a location to house their business. In this blog, we will break down the essential pieces of business loans and explain which one is more suited for what you want for your business.

This blog is broken down in three categories:

  • What is a business loan?
  • Why you need a business loan?
  • What are its benefits?

With these aspects broken down, hopefully, you will get the answers you need to receive your small business loan.

How Does A Business Loan Work?

We begin with ‘what is a business loan?’ The answer to that is similar to any loan that you might take out with a lender, for instance, a car loan, a student loan, or a mortgage. The raw truth is that, you will most likely need a loan if you want to start a business. Most businesses require quite a bit of money, especially in its initial years of business. When businesses are new, they need to establish themselves and create a customer base. However, this process can be grueling and cost money to keep your business’ doors open. After all, you will have to pay for rent, labor, and the equipment to finish your product. Plus, all of these expenses don’t necessarily guarantee customers and equity.
Since most of us don’t walk around with thousands of dollars in loose change in our pockets, a loan is necessary to get the money you need to help support your business. The best part about a small business loan is that you can get one at any stage of your business, typically these types of loans are based on your business’ needs.

A business loan is simple:

You Borrow. You Repay. You Move On.

The idea behind a business loan is that you can borrow a sum of cash from a loan office, such as Merchant Flow Financial. Together, you and a loan officer will discuss a loan agreement that works for you. During this time, you will both agree on the amount of money you need, the reason you need it, and the payment plan you would like to select. The payment plan is based on how much of the loan you can pay off in fixed payments, most often in monthly installments. Your adviser will help you select how much money you need and what payment plan you should opt for. The sum you borrow and the payment plan you choose will depend on your income and how much you can afford.
Loans will have a range from $50,000 to five million in loan capital. Again, the sum you choose will depend on your individual income and how much your business will require. For example, a niche service, such as a restaurant, demands a lot more labor, equipment, and supply than a small shop that sells a simple product, like a coffee shop.

Who a Business Loan Can Help

Business loans can be valuable to a new business because they ensure that you get the help and equipment you need to succeed. Your loan will also be able to support your business and its location. In many cases, a business needs a physical location to sell a product. Rent, building maintenance, and other expenses need to be kept up. Because of this, business loans can be an essential part of your business.
Typically, you will not want a business loan until you have an indication that your business will work. For example, before you can get a loan, you must be approved of the sum you are requesting from your lender. Because of this, you may need a few important pieces of information before anyone, much less a lender, will give you money to fund your business.
It is important that you collect information on expenses and have a calculation of how much certain items will cost to support your business. In some cases, you might need to take out an asset-based loan, which simply means you will need to put some of your own money down as collateral. The process of receiving your loan can be quick, but it is also important that you collect the right data about your assets, the items you will need to grow your business, and a total calculation of your income and what payment plan you can afford. Obviously, the last thing you want is to take out a loan that you cannot eventually pay back.

Merchant Flow Financial

We will continue this breakdown of business loans in the second part of this blog series. If you are interested in starting a business, you will need a business loan. If you are in the Fairfield, New Jersey area, contact us today!