The short answer? Yes.
If you’re starting a business, you may already expect expenses such as inventory, office equipment, office space and advertising, but chances are you’ll encounter other expenses, perhaps related to personnel, administration or licensing.
The challenges of starting a business
Small business owners face many challenges in their first year, including:
- Hiring top talent. Some millennials hire other millennials, as they’re more likely to share the same vision for the future. Others, however, realize the importance of bringing the older generation into their company, as these professionals have more real world experience and knowledge. Having a good understanding of the industry and roles you need to fill may better help you identify the right mix for hiring.
- Spreading brand awareness in a crowded market. Overall, many would agree that it’s good for the country to experience a growth in the number of new small businesses. Conversely, it poses a challenge for entrepreneurs, as they’re faced with mounting competition.
- Acquiring funding. As many as 55% of would-be entrepreneurs say that accessing money is the most difficult aspect of starting their business. While a microbusiness may cost as little as $3,000 to get off the ground, other business can climb in to the tens of thousands.
How a Discover Personal Loan helped a small business in New York
If there are business expenses you don’t currently have the capital for but could ultimately help the company grow, a personal business loan could be a viable solution.
Take, for example, the Campbell Cheese Shop in Brooklyn, New York, which was opened by two sisters using a personal loan from Discover.
Still, Americans seem to be entrepreneurial by nature and as many as 65% of net new jobs come from small businesses. In a typical year, nearly 1 million new businesses open their doors. If you are planning that yours will be among them this year, read on for tips on how to clear that biggest hurdle—initial financing:
What are the benefits and drawbacks of a small business loan?
The moment you realize you need cash for your business, your mind may turn to a small business loan. After all, this type of loan is designed for small, budding companies, perhaps like yours.
Benefits of a small business loan: There are times when a small business loan makes sense – such as if you need to borrow hundreds of thousands of dollars, but it may not make sense if your needs are simpler.
Drawbacks of a small business loan: Your biggest hurdles with a small business loan may be the eligibility requirements as well as the application process. Here are some of the challenges:
- Lengthy application process that can eat up hours of valuable time
- Documentation requirements, such as providing a business plan, tax returns, references and financial data.
- Receiving the funds after approval and loan acceptance can take up to 90 days.
- There are many types of small business loans, so just choosing the right one for you could take some time.
Although it’s common to initially assume that a small business loan is the best choice, you may find that these requirements are difficult to meet or will take longer than you want to get your business moving.
Benefits of a personal loan for your business:
Some of the primary benefits of a personal loan for business use – especially when compared to a small business loan – include:
- Simplified application process that can be started online or over the phone within a matter of minutes
- Fewer documentation requirements (i.e., no business plan required)
- Same-day decision in most cases
- Fewer complications, with the main decisions being the repayment schedule and amount to borrow
- Up to $35,000 can be sent by the next business day if you’re approved for and accept the loan
The simplicity and convenience alone is reason enough to learn more about using a personal loan for your business.
Is a personal loan the best option for your business?
As you consider your financing options, consider the following questions:
- How do you plan on using the funds?
- Do you need the money immediately, or can you afford to wait?
- How much money do you need to borrow right now?
- Which type of loan is most affordable over the long run?
Answering these questions, and consulting with a lender for each type of loan, will help you make an informed and confident decision that can position your business for a bright financial future.
Your first instinct may be to apply for and secure a small business loan, but you should know you have other, potentially simpler options. You may find that the benefits and convenience of a personal loan make it the right choice for your company.