Getting a business loan can seem intimidating to some people. Additionally, it may be confusing to know what to get a loan for. There are many different things that you can get a business loan for. Here are some of the common reasons.
1. A Business Buyout
One of the most common reasons to get a business loan is to buy out another business. For instance, if you are a dentist and want to buy a practice from an existing dentist, you would need to get a business loan. In this case, the dentist who is retiring who offer you their entire book of business as well as either a stake in the building, or rental included.
In order to do a business loan you would need to get an appraisal. The appraisal is very important because the prior owner may think the business is worth a certain amount, but until you get the actual appraisal you don't know for sure. The appraisal is usually done by an accountant who can look over the taxes, the books of costs and profits and so forth to see just how much the company is really worth. Additionally, they can predict how much they think the business will be worth over time. Once you get this appraisal done you can apply with the bank for a business loan.
2. Start Up Cash
If you are thinking about starting a new business, you will need to look into business lending to get start up cash unless you have an investor. For a business loan you should expect to only get a small amount. The risk of small business loans are high so the banks are generally weary of giving too much money. Additionally, you might expect to have a higher interest rate. Not as much as a credit card, but you should expect more than a standard loan.
3. Business Growth
If you already have an existing business and you want to grow the business, you can apply for a loan. This loan will help you to get cash freed up so that you can grow the business to the level that you want. In order to get this loan you will need to bring in all of your books and show the bank what you plan to do and how you intend to pay them back. This will be important so you can be approved for the loan.