small business loans

Small Business Loans Pros & Cons

Small Business Loans Pros & Cons

Entrepreneurs and small business owners seeking funds to grow their businesses can either borrow from lenders or raise equity from investors. Finding new equity capital is time-consuming and requires participation in future profits, and owners can lose control of their company, with management decisions subject to approval by an external board of directors.

Myths and legends aside, there is no evidence that corporate debt harms the long-term health of a small business or its owners. Warnings about borrowing, passed down from generation to generation, have been circulating for centuries to warn against taking on corporate debt.

This is a financial strategy that should be adopted, not despised, and here is why a small business loan might be just right for you.

The Cons of Small Business Loans

Terms of Repayment Are Fixed
The terms of a loan are clearly established at the time debt is extended, and lenders are reluctant to amend terms unless they receive additional benefits, such as higher interest payments, additional security, or authority over future cash expenditures.

Repayment Reduces Future Cash
Although borrowing initially provides cash or working capital, debt repayment can have the opposite effect, requiring cash that might otherwise be used for investment or dividends to the owner or spent in the future.

Lenders Can Be Hard Taskmasters
Corporate loans come in many forms, each with its own purposes and characteristics, but the following are the most common. No matter how cordial and polite the lender may be during the initial loan term, they are always a partner of the seller.

If the company gets into trouble in the future, the lender’s only interest is to protect the repayment of the loan, even if it leads to the company’s bankruptcy.

Small Business Loans Pros & Cons

The Pros of Small Business Loans

Administrative Simplicity
Seeking funding from a lender is straightforward and often a matter of completing basic forms and providing financial statements. Equity investors require periodic reports on operations, possible shareholders meetings, and board approval before taking certain actions.

Retained Ownership
In the case of equity, the lender does not participate in the company’s profits and losses, but only in its shares in other companies, such as its shares.

Management Control
The lender does not make personnel, financial or operational decisions, and its only interest is whether the borrower complies with the terms of the loan.

Clear Terms

The terms of a loan – such as principal amount, interest rate, repayment terms, and collateral, if any – are unambiguously established at the onset of the loan and do not change during its life

Tax Benefits
All interest paid on business loans is deductible from taxable income, which means that the entrepreneur effectively shares the cost of borrowing with the tax authorities.

Speed of Funding.
Borrowers typically use well-established sources of finance to guarantee and finance the amount borrowed. Finding a lender is often as simple as filling out basic forms and filing a financial statement.

If you need funding without wasting no time and get PRE-QUALIFIED IN MINUTES, We got you covered

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JNA Financing offers

  • SBA Loans.
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  • Equipment Financing.
  • And More

To know more Call us at  JNA - Financings (844) 377-8487 

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Business Loan Requirements Complete Checklist for 2022

In terms of the business loan requirements checklist, what are the common business loan requirements most lenders required? You need to prepare yourself and these documents to increase your chances of getting a business loan.

Getting approved with a business loan is much easier if you are fully prepared. Prepare everything that is needed that you will be asked to provide. Keeping both physical copies and digitally organized will help you save time in the future if you needed to. Here, we are going to discuss each common business loan requirements checklist.

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bank statement, business load requirements

Business Loan Documents Required  by Most Lenders

1. Bank Statements

This is the most important requirement for a business loan. Most lenders will require a bank statement to know your personal or business capabilities.

2. Business and Personal ITR

Personal tax returns will be provided. This will reflect your personal or business income. But this is not required for smaller loans.

3. Business Registration Proof

This will establish your personal and business ownership. Lenders will need to know how your business operates and its structures.

4. Permits and Business License

You need to provide a federal license or permit if your business is involved in a federal agency. Should not expire.

5. EIN (Employer Identification Number)

A 9 digit Federal Tax Identification Number also called Federal Employer Identification Number provided by the Internal Revenue Service (IRS).

Other requires needed such as Details of Your Other Loans, Business Accounts Receivable, Financial Statements, Other business loan details, and collateral proof.

Many business owners are hesitant to get a loan because of this requirement. Remember, at JNA Financing, you are qualified a few a minute, money in your bank in 3 days.  Read each document carefully, don’t just put in a folder and save it to your computer. Preparing yourself and your requirements will help you during the appraisal process.

Also, Read: Business Ideas for Veterans in 2022

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