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
Five Movies Coming to Netflix This October That You Cannot Miss!
There’s nothing like a good movie, a warm blanket, and a comfortable couch to ring in the weekend. And with great...September 29, 2020
What is Hard Money? The Advantages and Disadvantages of Using Hard Money
Hard money is a borrowing method where you let go of the conventional mortgage lenders. Instead, you opt for loans from...September 28, 2020
Seven Celebrities Who were Rich and Famous Before Losing all Their Money
We see the rich and famous life as extremely glamorous, and we believe they never have any money issues! Well, it isn’t...September 24, 2020
Top Five Key Trends Impacting the Global Business Management Scenario
The U.S. economy was the worst hit during the 2008 economic recession. However, over the past decade, the nation has come...September 22, 2020
Four Tips On How To Avail The Absolute Best Interest Rates
It’s a good thing that loan rates have decreased drastically. This, indeed, is a great piece of news for people who are on...September 21, 2020
How Long Should You Delay Your Retirement In Light Of The Coronavirus Pandemic?
Retirement is an most important phases of life. That’s because it is finally getting to call it a day, which makes it...September 18, 2020
Five Reasons Why Your Car Loan Might Be Getting Rejected
Owing a car is still a dream for most people despite being necessary to commute around with ease. One reason most...September 11, 2020
Everything We Know So Far About The Much-Awaited Batman Reboot
The Dark Knight is all set to make a comeback. However, it will be in a new incarnation in 2021, before...September 9, 2020
Four Post-Retirement Jobs That You Could Explore
Retirement does not mean spending your time on the porch or babysitting your grandchildren. Use this time to explore, build something innovative,...September 1, 2020