5 ways a business loan calculator can help you get a loan faster
When wanting to apply for a loan using a business loan calculator, there are certain things you should consider to increase your chances of getting the loan approved.
Here at Lumi Finance, we understand the ins and outs of running a small business (we are one ourselves).The fact that you, as the business owner, are (most likely) wearing many different hats and have little extra time to spare. We get it.
To save you some time, especially when it comes to getting business finance approved quickly, we will share a list of things to consider. And also some tips on how a business loan calculator can help you get a loan approved faster.
To start with, ask yourself the following questions:
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Why & for what do I want to take out the business loan?
Examples of these might include things such as buying bulk stock at a cheaper price, renting out new space, replacing broken equipment, upgrading equipment or buying new equipment, helping manage cash flow etc. However, reasons such as financial hardship would be a red flag to a lender, as this would be seen as a potential risk that you might not be able to repay the loan. So, get clear on the purpose of the funds and make sure that it’s based on growth & opportunity.
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What type of business loan do I need & what lender should I choose?
Depending on the purpose of the loan, the repayment period, the interest rate, the financial position of your business and the availability of assets you can leverage, there could be a few loan options to choose from.
Think about whether you need ongoing access to cash flow due to seasonal fluctuations, for example. In this case, a business line of credit, which works similar to a credit card in the sense that you would get a pre-approved amount that is available to you at any given time. However, you would only ever pay interest on the amount you actually borrow. This option can be useful for businesses needing smaller but frequent and ongoing amounts of cash. Lumi Finance offers business lines of credit from $5,000 – $500,000. You can find more information about it here.
If your business needs a larger one-off amount to purchase some expensive equipment, for example. In this case a business term loan could be beneficial. You would take out the loan in full and start making repayments based on the total loan amount and the agreed terms, including the accrued interest. This sort of business finance can be a good option for larger investments that could otherwise affect your business’s cash flow.
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Do I have any assets to leverage? And if so, do I want to use them as security?
Another criteria to consider is whether you’d take a “secured” or “unsecured”loan. An “unsecured loan” means that there’s no asset involved that the lender could use as collateral. However, because of the greater risk involved, the lender would typically charge a higher interest rate. On the other hand a “secured loan” is one that is backed by an asset. So, if you were unable to afford the repayments, the lender could collect your asset as a form of repayment and any additional amount would still be owed.
Lumi Finance offers term loans from $5,000- $500,000 and up to $300,000 unsecured. You can find out more about our small business term loans here.
When it comes to choosing a lender, make sure that they offer the right type of loan you want to apply for as well as competitive rates and flexible terms. Online lenders such as Lumi Finance can even create a bespoke loan solution tailored to your business’s specific needs.
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How much do I need vs. how much can I afford?
The reality is that how much you need is not necessarily what your business can afford. That’s where a business loan calculator such as this one here comes in handy.
You can either input your desired weekly repayment amount and interest rate and it will give you an estimate of how much money you could potentially borrow. Alternatively, you can also put in the amount you wish to borrow and it will show you an estimate of your weekly repayments including interest rate etc.
This tool can give you an indication on whether the amount you wish and can afford to borrow are aligned. If not, knowledge is power. You can then focus on putting a plan together in order to receive the desired loan amount. Or, you could simply adjust the business loan amount to what you can afford at this point in time.
To sum it up, here are 5 ways a business loan calculator can help you get a loan approved faster:
1. Estimate loan affordability
A business loan calculator can help you estimate the amount of money you can afford to borrow. By considering your financial situation, such as your monthly revenue and expenses, the calculator can help you estimate your loan eligibility, including the amount you can borrow, the interest rate, and the loan term.
2. Compare loan options
By using a business loan calculator, you can also compare the loan options available to you from different lenders. The calculator can help you compare the interest rates, repayment terms, and fees of different loan products. This can enable you to make an informed decision on the best loan for your business.
3. Save time
Using a business loan calculator can save you time by providing you with quick and accurate estimates. You can get a rough estimate of your loan eligibility and repayment amounts within minutes, allowing you to focus on other important aspects of your loan application.
4. Identify areas of improvement
A business loan calculator can help you identify areas where you can improve your financial position to increase your chances of loan approval. Or simply improve your loan conditions & terms. By playing with the loan calculator and adjusting different inputs, you can determine the impact of different factors on your loan eligibility and borrowing capacity, such as increasing your revenue or reducing your expenses.
5. Plan for the future
By using a business loan calculator, you can plan for the future by estimating the impact of different loan terms and repayment schedules on your business’s finances. This can help you choose a loan product that aligns with your business’s financial goals and ensure that you can comfortably repay the loan over time.
