One lesson we should have learned over the last few years is that relying on a single job or source of income is extremely risky! With companies going out of business and employees being retrenched, many people concerned about their financial security have turned to side hustles to ensure that should they lose their job, they won’t be entire without an income.
Maybe you also have a fantastic business idea that you want to get off the ground. But starting a business costs money. Even if you have savings, it is not recommended to use all of it to start a business. This is because it usually takes a while before a company sees profits, and you will be stuck if you need the money.
A good option is to use an installment loan to start a new business. An installment loan is a type of personal loan. As the name suggests, you have to repay it in fixed monthly installments until the entire amount, including fees and interest, is paid off.
If your credit rating is good, you can get an installment loan from a traditional lender like a bank. This does not mean that folks with poor credits are out of options. If you’ve got poor credit, you can apply for an installment loan from an online installment lender offering bad credit loans.
Dream Big But Start Small
It’s a good idea to dream big but start small in this current economy. This means taking a cautious approach by reducing your overheads as much as possible. If you have a business idea, think about how you can start it with as little money as possible since opening a business is a risk.
For example, say you are a nail tech and would like to open a salon. You would need to rent a shop that would tie you into a lease for at least a year. Then you would need to buy furniture and equipment and pay for insurance and utilities. Instead of committing to this costly approach, consider offering a mobile service where you travel to clients’ homes.
This will save you the cost of rent, furniture, and utilities and give you time to build a client base. When you have a stream of regular clients, you can consider renting a store as you’re more likely to have a steady income for the business.
This same example can be applied to virtually any business, whether you want to sell goods or offer a service.
Benefits of Taking an Installment Loan to Start a Business
There are many other types of loans. But typically, an installment loan, even a bad credit installment loan, is the best option. Here’s why:
1. You Have Enough Time to Repay it, and the Amount is Fixed
When you take an installment loan, you have to repay the loan over a period of time in fixed installments. This allows you to repay your debt comfortably as you’re not required to pay the total amount at once.
Also, since the installments are fixed, you pay the same amount every month, making it easier for you to budget. The monthly installments include the loan amount, interest, and fees.
2. You Can Get the Money Quickly
It’s easy to apply for an installment loan. You can apply at the lender’s storefront or online at your convenience.
Depending on the lender, the approval process can be very quick, and you can receive the funds within the same day if your application is successful.
3. You Can Borrow a Larger Amount
Even with poor credit, you can borrow a larger amount of money if you take an installment loan compared to other loan types like payday, title, or pawn shop loans.
Access to more capital will help you start your business faster rather than waiting to qualify for a series of smaller loans.
4. Helps to Boost Your Credit Score
If your credit rating is poor and you’ve applied for a bad credit installment loan, you can use this loan to improve your credit score by repaying the loan on time.
When your credit score has improved, you’ll be eligible for better loans that you can use to grow your business.
Also Read: Business Loan: Where Can You Get It?
5. You Don’t Jeopardize Your Savings
Using a loan means you don’t have to deplete your savings to fund your business. Since your business will likely take some time to become profitable, you can use your savings to live off while you run your business.
If the company is a side hustle and you still have a full-time job, you can keep your savings for personal or business emergencies.
Draw Inspiration from Successful Entrepreneurs with Humble Beginnings
You may feel frustrated knowing that you have an amazing idea that you can turn into an incredible business empire, but a lack of capital is holding you back.
Before throwing in the towel, remember that some of the greatest entrepreneurs started with almost nothing and had to borrow money to start their businesses.
Some of these include:
The Founders of Google
Sergey Brin and Larry Page had to borrow money from friends and family to fund their idea. Using borrowed money, they bought some servers and rented a garage in Silicon Valley. In this simple garage, they launched their first search engine, which was nothing like the search engines we have today!
An investor, Andy Bechtolsheim, was impressed with their work and determination that he loaned them $1000 000, and with this money, they founded Google.
The Founder of Under Armour
The name Kevin Plank probably doesn’t ring a bell, but his billion-dollar company, Under Armour, is well known globally. Kevin used savings and five credit cards to start his business. But unfortunately, the business didn’t take off as expected, and within one year, he owed a massive amount in credit card debt.
His luck turned when he sold his clothes for only $17,000 to another company called Georgia Tech. People began taking an interest in his clothes, and sales slowly grew. Then his clothes were bought and worn by NFL teams and later stocked in major retail stores.