Alex used a personal loan to launch and grow his restaurant management business after banks wouldn't lend to him.
We’ve all heard of the small company started by a couple of college dropouts in a garage that becomes a huge international success. The poster child of the American Dream.
Most small businesses, however, are like the corner bakery in your small town, the jewelry maker that sells at the local swap meet, or the catering company your friend runs out of her kitchen. Small businesses are the lifeblood of the U.S.. economy.
Small businesses need capital, and once upon a time long ago, community banks would be there to help. If you had a great idea, a growing client book, a working product, or a unique business skill, banks were willing to take a chance on you.
Take Alex, a former private equity VP turned entrepreneur in his 30s. Alex started his restaurant management company KitchenSync after helping one of his friends turn his restaurant business around.
For the first few months, Alex ran the business on the side and used his own savings and credit cards to launch the company. Pretty soon, he landed 3 more restaurants and had to hire a client manager, buy computers, and set up a temporary office.
“I knew that unless I ramped up to 10 to 15 clients in the first couple of months that we wouldn’t survive, which meant hiring a sales person and investing in some local marketing.”
“I had revenue coming in, so I reached out to a couple of banks and small business lenders and their answer was either no, or the terms were so bad that I would go under just trying to pay back the loan.”
Instead, Alex used his most recent pay stubs as well as the income from his first few clients to secure a $35,000 personal loan. The loan had a high single-digit APR and a five year term with equal monthly payments of $725.
“Getting the capital to expand was a life saver, and having equal monthly payments made it much easier to budget. Plus, the whole process was fully digital, I didn't have to go into a branch, and I got the money in less than 2 days."
Alex and KitchenSync ended up paying off the loan in under 4 years, and spent less on interest than on our credit card debt that was half the amount.
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The “Gig Economy” makes it easier for people to work remotely and on their own schedule for companies such as Uber, AirBnB, TopTal and Upwork. Web developers, graphic designers, consultants, and other specialized professionals can make a great living AND have a great work-life balance.
Getting started in the Gig Economy often takes a bit of an investment. For example, if you’re a freelance photographer, you may need to buy a new camera, a laptop and a photo editing software. If you want to rent a spare room or guest house on AirBnB, you may need to renovate the space or get new furniture in order to maximize your rent. You can also use a personal loan to take a coding class or get your certification.
Personal loans are a great option for one off business expenses or career investments [Link], particularly if it results in earning higher income. Unlike credit cards, with a personal loan you know exactly what you’ll pay each month, which helps you decide how much to take out and how long it will be before you’ve paid it off.
Use our simple online application to find out what loans and terms you qualify for in just a few minutes. You can also use our loan payment calculator and personal loan vs. credit card calculator to find out how much you’ll pay each month and how much you’ll save compared to a credit card.
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