As an owner of a t-shirt design and printing shop, you might need some financing. Furthermore, the amount of money you need to fund your business will depend on several factors. For example, if you own an online t-shirt design and printing shop, you might need less funding than those who have a physical store.
Types of Business Loans Worth Considering
The following are the options you have in funding your t-shirt design and printing shop:
Under a term loan, you can get a lump sum of money. Once received, you will be required to repay the loan with interest. Moreover, term loans have a fixed time frame in which you will repay the loan.
Online lenders most likely offer term loans to help you get a loan amount up to a million dollars. Furthermore, they can also provide you the amount way faster than traditional banks.
SBA loans are backed by the Small Business Loan Administration, a government organization that is designed to help small businesses get funding. Moreover, repayment terms vary depending on how you want to use the funds.
SBA loans can help you get loan amounts up to 5 million. They can also provide you with the lowest interest rates. However, it can be challenging to qualify.
Personal loans can be used for almost anything, including funding your t-shirt design and printing shop. This type of loan tends to consider your creditworthiness to qualify. Furthermore, those with good credit tend to be offered favorable loan deals (low-interest rates and reasonable loan terms).
On the other hand, borrowers with bad credit are most likely to get loan offers with higher interest rates and less favorable loan terms than those with good credit. However, this doesn’t mean you can’t get a loan with a manageable interest rate and terms. Several lenders will lend you cash despite your credit rating, which usually reflects the status of how much you have borrowed in the past.
Business Credit Cards
Business credit cards are considered revolving credit. You can withdraw money from the card and repay the amount as long as you need to. However, it is vital not to exceed the set credit limit, because if you do, you might be charged exorbitant fees.
Business Lines of Credit
A business line of credit works like a credit card. You can get the money you need as long as you don’t exceed the credit limit. Furthermore, you will only pay interest on the money you have withdrawn.
You might need some equipment for t-shirt printing. Equipment loans are an excellent option that can help you. This type of loan can help you purchase or lease the equipment you need to grow your business.
The loan term is usually connected to the lifespan of the equipment. Also, the interest rate will depend on your business’s strength and the value of the equipment. Furthermore, the equipment involved will serve as collateral for the loan.
Merchant Cash Advance
Merchant cash advances can help you get a lump sum of money upfront. This can be used to fund your t-shirt design and printing shop.
This funding option works differently from a term loan. Repayments for term loans work by making a fixed payment monthly from your bank account. On a merchant cash advance, you make repayments by withholding a percentage from your debit or credit card sales. It can also be done by withdrawing on a fixed daily or weekly basis from a bank account.
Microloans are a type of small loan. They are available from mission-based lenders and non-profit organizations. Moreover, loan amounts tend to be $50,00 or less.
This type of loan is usually offered to small businesses situated in disadvantaged communities.
Tips in Applying for Business Loans
The following are the things you should do before you apply for any business loan:
Prepare Your Business Plan
You have to make sure you really need the fund you want to borrow. Making a business plan can help you give an idea of where your business is going in the long run and whether taking out a loan can get you there. Furthermore, a well-defined business plan can also attract lenders to give you the funding you need.
Assess The Financial Situation of Your Business
Lenders would want to make sure you will repay the loan. Hence, they will do their best to evaluate your loan application thoroughly. Moreover, they’ll check your capacity to repay by evaluating the following:
- Credit History
- Cash Flow
- Job History (only if you don’t have enough experience in the business industry)
Prepare Your Paperwork
The application process will vary on the type of loan you are going to get. However, most of the time, lenders will require you to present cash flow projections, a business plan, and financial statements. Hence, it is vital to prepare all the necessary documents.
There are many options you can choose from to fund your t-shirt design and printing shop. However, in deciding what to get, also consider what you can afford. Always review your financial capacity before deciding what type of loan to get.