When Is it Time to Take Out a Business Loan for Your Side Gig?
January 26, 2018
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When your side gig takes off, it's not uncommon to hit a wall. You've expanded your small business to its capacity with the supplies, space and inventory you have now. To make it go further, you need more money.
Here are three ways to know it’s time to add more capital to your business, and where to go to find it.
1. You don’t have the time
There’s a reason they call it a side gig. While you enjoy running this small business, you likely have a full-time job that takes up most of your time — or you’re a stay-at-home parent and your kids take up almost all of your time.
You want to take things to the next level but only have two hands and a few hours a day. To realize your vision, it may be wise to hire someone to help out. For example, a virtual assistant to help with time-consuming menial tasks, or a freelance writer to write some of your content.
Taking out a business loan can give you extra leverage to outsource so that you can focus on what brings in the money.
2. You need to upgrade your equipment or buy inventory
When you started your side gig, you may have been afraid to invest too much in equipment and inventory in case you didn’t earn any money. But now that you know the business can be profitable, it may be time to inject some capital into those areas of your business.
Upgrading your equipment can help your small business become more productive and efficient. And buying more inventory ensures that you’re not running out of stock as orders increase.
Be careful with these two areas, though. Consider the ongoing risks of your side gig and avoid investing more money than you can reasonably pay back.
3. You want to build business credit
If you don’t need a lot of extra capital now but plan to in the near future, taking out a small business loan now can help your business establish a business credit score. If not, you may have to rely on your personal credit score. If that number is relatively low, it may be difficult to get the funding you need.
Even if it’s high, using a business credit score to secure funding for your side gig prevents your personal credit score from suffering if the loan goes south.
The sooner you build a credit history for your business, the sooner you can stop relying on your personal credit score to get funding.
Where to get a business loan for your side gig
If you’ve decided it’s time to ramp up your side gig with a business loan, here are the two best places to get one.
GuideToLenders is a website that allows you to see offers from multiple lenders in one place. Simply share the following information and get pre-qualified:
- How you plan to use the funds
- How much you need
- Your credit score
- Your employment status
- Information about your business
- Your personal information
You’ll also need to share your Social Security number, but don’t worry. GuideToLenders will only do a soft credit check, which doesn’t hurt your credit score. By doing this, you’ll be able to compare rates from several lenders to make it easier to pick the right one. There’s also a low minimum loan amount, depending on which lender you choose.
One thing to note is that GuideToLenders connects you with personal loans only, so it won’t help if your goal is to build business credit.
If you want to focus on building your business credit, BusinessLoansNow.net can help. The process is the same as with GuideToLenders. Answer some questions about yourself and your business and the website will connect you with several small business lenders who can make you an offer.
BusinessLoansNow.net is a great choice if your credit score is low, but its minimum loan amount is $5,000 so it might not be a good choice if you’re not thinking quite that big yet.
Are you ready to take things to the next level?
If you’ve hit a wall with your side gig and need money to take the next step, don’t think twice about it. It can be scary to invest in something with an uncertain future, but if you’re smart about the process, it doesn’t have to be.
Take the time to research all your options. Make sure to shop around so you can compare rates and terms from several lenders. And do the math beforehand so that you don’t borrow more than you need. With this kind of proactive planning, your business loan will be a lot more meaningful and pose less of a threat to your financial well-being.