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How to Get an Emergency Loan for Your Business
Posted on | March 27, 2013 | Comments Off
Just like you may need to get a loan for personal emergencies, you may need to get an emergency loan for your business. There are many different options for you to receive funds, but some may take longer than other. Also, many loans come with very high interest rates and special terms. It is always important to make sure the option that you choice is the best for your business and situation.
Friends and Family
Friends and family can be a great resource when you are need of a emergency loan. One thing that both parties should make sure before any money is transferred is a written document. To protect both the lender and the borrower a contract or agreement needs to be made. You can write out how much money is being borrowed the reason for the emergency loan and the repayment terms. Sometimes many people will use other options before family and friend loans to make keep their personal and business life separate.
Bank Loan
Depending on the bank that you may be associated with, you may be able to pull out a loan. This is the best bet, if you don’t have any family or friends that can help you. The borrower will need to have decent credit to be approved for many different loans. Banks have a few different options for their customers. They can try to pull a home equity loan, home equity line of credit or an unsecured loan. If the business is registered properly in the state that you reside in, then you may be able to pull a business loan. You will need to have decent credit or have some sort of collateral to back up the loan and become approved.
Payday Loan
When an emergency happens and a person can’t take advantage of a bank loan or the family and friend option, they could try a payday loan. This loan can be very dangerous if it isn’t taken seriously and repaid quickly. Payday loans often come with very high interest. Some payday loans can cost you over hundred percent APR. These loans will require you to have checking account, voided check to save to your file and a recent paycheck stub. This option is the best for people who have a full time job and a business on the side. A payday loan should never be used unless it is an emergency or the very last option that you have.
Emergency Cash
If you have already have a stash of cash saved up for an emergency, this would be a good time to use it. Even if the cash is being saved up for another reason, it is a great option. If you don’t have an emergency savings, this is the best time to start thinking about starting one. Emergencies can come at any time for any reason. Having an emergency fund will be the safety net that you will need to keep you from getting a loan in the future.