Whether you are starting or growing your business and need financing, there are different ways to seek capital for them.
The quick option for small entrepreneurs is to go to family and friends to get a loan. This may be the easiest way because there is no red tape involved.
There are more complex options which are to look at the Stock Exchange to seek financing, enter Startup events or look for more financial institutions to get one of their financial products.
However, many of these options may seem difficult, we do not know how to participate, there are no events nearby or there are too many requirements.
Therefore, the option for the small entrepreneur is usually to go to the banks.
If we already have a bank account with one, we usually go to our executive to mention that the business needs a loan for working capital or fixed assets.
He reviews the data in the system and realizes that the business has generated cash flow through reasonable deposits, so he does believe that the small entrepreneur is a candidate for credit.
Everything seems to be going well until he pulls up the list of requirements.
After fulfilling the requirements with the bank, you might get rejected because you don’t have a credit record.
So how are you going to build some credit record if they don’t give you a credit?
And you might think in that moment, why do you didn’t accepted to get the personal loans for students in Mexico while being in university and they were offering pretty simple, that could have hep to build some credit.
So what are the alternatives?
And as mentioned, the problem relies on the static system that goes round and round to just obtain the first credit.
If traditional banks are not going to help you to get your first credit, because you don’t have enough credit record, then you will have to look for some alternatives to the banks.
Some of the options that people have is to aim for online loans and banking programs.
The so called Fintech companies are meant also to support young people to get their first credit card or loan, but this also means having a higher interest rate.
As a recommendation, I say that don’t be afraid at first of this interest, just use it as a tool to eventually access a higher credit.
Online loans and banking is way easier and comfortable to use, and they usually offer more features than traditional banks.
And as a tip that I give you is to use some of this online credits as early as possible so that you can start building your record.
It doesn’t really matter if its a low 1,000 to 10 thousand pesos, it is important that you ask for your first credit.
Yes, it might be expensive due to the interest rate, but as you keep building up your record, then you will improve your interest rates.
That is one of the advantages of online credits, that your record is trackable, and as your keep up good signs, then in the long term will be beneficial.
Also, don’t get crazy by getting your first credit, even if it is easy to pay, keep control of your other expenses.
Remember that not paying at time, might also generate even more interests than expected.
So be sure to plan your income and expenses so that you can fulfill your responsibility.
Sometimes unexpected situations might have, so sometimes it will be better to have a backup that can give you support to pay your priorities first.
It is likely that any person can get a personal loan, however the interest rate will be much higher than a business loan.
So analyze what are you going to use the credit for, if its for personal expenses or if it is for business.
Don’t mix the credit that you are getting.
Remember that borrowed money costs money, so be sure that you are getting a good interest rate and that you are going to spend wisely.
Having a credit is not bad, so don’t think you are having now a burden, the first credit is a path to becoming an expert on financial management.
