A Comprehensive Guide On Loans And Financing Options For Freelancers
Freelancing can be quite rewarding when done the right way. However, there are a few downsides to it as well. For example, if you are planning to expand your business and want to take a loan, the risks that are involved makes it difficult for banks to trust you easily. Freelancers are considered as sole proprietors who are responsible for all the losses incurred in the business. In fact, if somehow the freelancer becomes physically unfit to work, the bank will be at the receiving end. However, more and more people are opting for freelance work since it gives you the freedom to work whenever and wherever. Hence, here are a few tips on how to get loans or financing if you are a freelancer.
Since business loans are tough to get for freelancers, they need to find other alternatives. Business loans are given only to established organizations who can show some amount of profit in their business. Personal loans, on the other hand, are easier to get since only your personal credit history is going to be checked. Your income sources, credit score, and debt-to-income ratio are the things that will be taken into consideration. They are interested in your business and wouldn’t even care if you have not started it yet. The only downside here would be that you won’t be able to borrow a lot of money like business loans since personal loans can go up to only $50,000. But if that’s enough cash to fund your business, go for it!
Lines Of Credit
Lines of credit are issued by banks. Several online lenders also offer lines of credit. This how it works: you will be given access to a certain amount of money, and whenever you want, you can withdraw a limited amount. You will only have to pay interest on the amount of money you borrow. Sounds familiar? That’s because a credit card works in exactly this way. Thankfully, lines of credit often have much better interest rates and fees when compared to credit cards.
Microloans can work well for some businesses. Though the amount of money you can borrow is even lesser than $35,000 — it’s not a lot of cash, but it’s still something, right? However, since the interest rates are low, it is easier to borrow them at your convenience. Microloans often target a specific demographic. Women, seniors, veterans, or minorities sometimes find it challenging to find other kinds of loans. Hence, microloans are perfect for them. The lenient terms and rates work well for freelancers, too, and they must take advantage of microloans in order to invest in their own business.
The newest kid on the block has to be crowdfunding. Some amazing campaigns by Kickstarter and GoFundMe have made the rest of the world sit up and take note of crowdfunding initiatives. If you have a creative idea, which you can’t implement for lack of funds, crowdfunding should be just the answer to all your questions. So how does it work? When your idea seems worthwhile to potential backers, they fund your project and in lieu get exclusive access to your products and services. Unlike lending or other financing options though, you don’t have to repay the money since you are already repaying by giving them free product or service. However, it requires a lot of planning and time. Since you need to have a flawless campaign to attract donors, you need to have a solid plan.
Late-paying customers? No problem, invoice factoring can help! There are factoring companies who can buy your unpaid invoices and give cash upfront. There are also invoice financing companies where you can get a loan against your invoices. Various lenders will have various rates and terms, but they can be great for freelancers or those who have just started and are bootstrapped for cash.
If you are a freelancer struggling to get a loan, one of these options might be suitable for you, and you can finally start your business. However, the bottom line is that the research work for your business should be impressive enough so that you can attract donors or raise the required funds. When you have a strong foundation, it won’t be difficult to get funding!
More in Business & Finance
Four Mortgage Lenders That Are Sure To Make Life Easier For You!
The selection of a mortgage loan cannot be taken lightly. A mortgage is usually a very high amount as it is...June 18, 2020
Five Bad Reasons for Which You Should Never Take a Personal Loan
Every once in a while, we are all in a situation where we could use some extra cash. However, not everyone...June 17, 2020
Here Are Three Great Things That Could Happen To You If You Retire Early!
It’s difficult to retire at all, let alone to retire early. This is still true even when you are settled down...June 16, 2020
What Exactly Is a High-Yield Investor Checking Account?
A checking account is a must in day to day life. Without a checking account, you would neither be able to...June 10, 2020
These Are the Top Foodie Series to Watch on Netflix Right Now
We’ve all had to spend more time at home than we ordinarily do, no matter what our lifestyles were before the...June 9, 2020
Should You Refinance Your Home Loan With Adjustable Rate Mortgage?
Refinancing your mortgage is a great way to grab a better interest rate. Have you done that yet? If you are...June 8, 2020
Using Loans to Save Yourself From Credit Card Debt
Many economies thrive on credit. So many people are in credit card debt and do not know how to pay for it....June 3, 2020
Love Jim Parsons as Sheldon Cooper? You Should Watch His New Show on Netflix!
Love him or hate him, you just can’t ignore him! Thus was the charm of Sheldon Lee Cooper. He made his...June 2, 2020
Simple Interest Loan: What Is It and What Are Its Benefits?
When it comes to mastering personal finance, simple understanding interest is the key. This is a fundamental concept that we came...May 28, 2020