Using other people’s money

By Ken McEntee

Sometimes we need to expand our business to make our lives easier, but this can be costly. Sometimes it’s necessary to borrow money to buy a new machine or remodel a kitchen.

But do you qualify for a loan? Here, Gary Cerasi, CPA, owner of Creative Business Strategies, discusses how to improve your chances—and get the best terms.

Q: What qualifies me, or my business, to get a loan? Do I need great credit?
A: Credit is important but cash flow is king. You need to show you can pay back the loan. You also need to show you have collateral—something the lender can take if you do default on the loan. Along with those things, a lender generally will look at consistency of income, and for a business, years of experience in its industry.

Q: What’s the most advantageous type of loan to get?
A: A home equity loan is typically the easiest to get, and least expensive in fees and interest rate.

Q: Where is the best place to get a loan?
A: A bank is the first place people think about. But there are alternative sources, such as high-risk lending or private equity. Some cost more in interest and are easier to get. Others cost less but are more difficult to get.

Q: How do I shop for the best deal and the most reputable lender?
A: A financial expert can help. For example, I can assess your situation and put you in front of the right institution.

Q: Is a loan worth it, or should I save up and pay cash for what I need?
A: It’s always better to use somebody else’s money. Save yours for a rainy day when you really need it. Reserves are very important.

You can learn more by scheduling a no-cost consultation with Gary, at 440-546-9359. Creative Business Strategies is located at 192 East Wallings Road, in Broadview Heights. You can learn more at CreativeBizStrat.com.