If you have done all the planning and calculations that you need to develop your business or to establish a business anew, where should you go for a loan? A private vendor may be easy to get you the money and a bank may be difficult to get you the money. How to decide who to go for?
Private lenders; ups and downs
Private lenders are normally the quick lenders. If you are in a quick need, a bank may not be suitable for you. Private lenders offer you the loan with very less paperwork compared to the banks and they often give money more quickly than the banks.
The one problem with private lenders is that they may not be able to give as much as a bank can give you. If you are in a quick but small need, a private lender could be the solution. But there is another issue with the private lenders. That is the higher interest rates, and this is particularly true to bad credit business and bad credit personal loans. Normally the loans consume most of your money as interest to the lender. If you don’t settle the loan very quickly, you may end up in a situation where you will have to pay multiples of the actual loan amounts in interests only.
Some people suffer that they have paid only the interest money and already more than the loan money, but the capital loan is not yet settled; they cannot because their actual income is not enough to settle the loan in full in one attempt. Most private lenders insist that the loan capital be settled in one single payment; but they want the interest every month. If you can find a private lender that provides more money, less interest rates, allows partial payments of the capital and gives you money quickly, they would be a good option.
Banks; ups and downs
Banks normally offer large amounts of money in lower interest rates. Dealing with the banks is safe in case of an emergency. Even if the bank has gone down, the government will take responsibility or there will be an accountability, often more transparent than with the private lenders.
But the problem with the banks is that they normally need much paperwork than the private lenders. In many cases the banks spend months or at least weeks to process the loan. People get frustrated before the loan money can actually get into their hands. Another undesirable thing with the banks is that they cannot afford to lend for all kinds of businesses. You need to have certain criteria to get a loan from banks; which the private lenders do not necessitate you to submit. You can go for a bank if they give faster with less paperwork and less hassle.
Factors that private lenders and banks consider
There are a number of things that both private lenders and banks would like to know before providing you with business finance. They include your income, credit history, and bank account. Both of them also seek to support good business ideas which are backed by a solid business plan. Such a plan includes reasonable forecasts, contingency scenarios and is backed by experienced and reasonable people who have monetary stake business-wise.