Getting a Title Loan For A Small Business
For many Americans, owning a small business is a dream in life. Not only does it give you the opportunity to create something that is completely yours, but you also have full control of how much money you make.
Business costs can be high, though, especially when you're opening or expanding. Many business owners look for financing options that will allow them to borrow the money they need now and pay it back later, and one such option is auto equity title loans Orlando.
Not all financing options are created equal, and choosing the right one requires you to figure out which one best fits your small business's needs. Here are the pros and cons of getting a title loan for a small business.
Benefits of Funding Your Small Business with a Title Loan
There are many perks with title loans, and these include:
- Speed – You can complete a title loan application and get your loan money in as little as one day.
- Ease of applying – Don't worry about gathering tons of records. With a title loan application, you simply need ID, your car and the title to that car.
- Repay with flexible terms – You can pay your full title loan off on the due date, or extend it into a new term by paying any fees and interest.
- Your credit and income don't matter – The lender won't need to see proof of income or run a credit check on you to approve your car title loan.
When you compare getting a title loan for a small business with getting any other type of loan, it's clear that the title loan process is much simpler. With other loans, your credit and income play a huge role. This can be a problem, especially if you don't have very high income yet because you're trying to get your business off the ground.
While title loans can have higher interest rates than other types of loans, keep in mind that when you're getting a title loan for a small business, any interest you pay is tax deductible. In fact, if you were planning to get a loan for some personal financial issues and you also own a business, you'd be better off putting the loan towards business expenses and using the money you save on those expenses for your other financial needs. This allows you to maximize your tax deductions.
Drawbacks of Title Loan Business Financing
It'd be disingenuous to say that a car title loan is always the best option for business financing, as there are some potential issues to keep in mind. Chief among them is the fact that a title loan is supposed to be a short-term loan, and the most common term length is just one month.
You're expected to pay the entire title loan after that one term, or you can extend it and pay more interest. Compare that to how you would repay a standard term loan:
- You get the loan and have a term length that is likely one year or longer.
- You make payments on a regular basis, such as monthly or biweekly.
- After you've made all your payments, the loan is paid off.
If you need more long-term financing, then you should get a loan with a longer term to start, because you'll pay too much to keep a title loan that long.
This doesn't mean getting a title loan for a small business is a bad idea. It just depends on what you need it for. If you're looking to get a quick financial boost to cover a cashflow shortage or some expansion costs, then a title loan can be a convenient way to go.
The important thing with a car title loan is that you know how you'll be paying back what you borrow before you borrow the money. This is obviously important with any type of loan, but even more so with a title loan because of the short term.
Making the Call on Your Small Business Financing
The good news is that it's not too difficult to figure out whether getting a title loan for a small business is the right call. If you're looking for short-term financing, then go for it. For long-term financing, you should probably look at other options first to avoid paying too much in interest.