There are several good reasons for taking out a business loan, and three of them are listed below. You may think of others, but these three can help you determine whether installment loans may be right for your company.
- Installment loans usually have very flexible payment arrangements. It’s possible to set the payment times for as little as one month or as long as one year before you ever have to pay back the first penny. If you choose a longer time before payments are due, you can make a portion of the anticipated payment a “line item” in the budget. By doing this, you will go ahead and set aside the money — preferably in a separate account that earns interest — at regular intervals.
- Most loans with installment payments don’t have a penalty for early payback. It may be hard to believe, but some financial institutions actually do not want you to pay loans off early. These lenders may actually “penalize” you by charging fees for early payoff. If you anticipate that business will be good and you believe you will be able to pay back the loan quickly, look for business loans with no penalty for early repayment.
- Installment loans can help build a good credit history. Paying back these loans on time and making the full payment each time it is due shows creditors that you are trustworthy and responsible with your finances. This may make it easier for you to borrow more money after you’ve paid off your first loan.
Any business, from startups to established companies, can face financial difficulty. When you need help, consider funding with installment payments.