STEPS TO AFFORDABLE FUNDING
Before seeking a loan, take the following steps to increase the odds of securing affordable funding.

Understand the differences between the types of funding. There are several choices available when it comes to funding. Investigate each one before deciding on a loan product or looking for a lender. Small Business Administration (SBA) loans, peer-to-peer lenders, cash advance lenders, and credit cards are some of the more popular options available for financing a small business. However, the most popular option may end up being the most expensive.

Use credit wisely and maintain a high credit score. Both business and personal credit scores are important to lenders. These scores show how well the professional handles their finances and the finances of their business and helps predict repayment ability. A low score can decrease the chances that the professional will be offered a loan. In addition to risk assessment, credit scores are also important when looking at loan costs. High scores are usually needed to secure the best-priced loans. Small business owners should avoid mixing personal credit and business credit histories as combining the two can lower the personal credit score. Additionally, using personal information instead of business information usually means that the small business will not establish a strong business credit history.

Have the spa's business records in order. When applying for a loan, the professional will be asked to produce a number of documents, including bank statements, personal and business tax returns, lease agreements, a list of business assets, and more. Leveraging technology can save time and stress. Consider utilizing a cloud-based accounting system as this type of online software can manage invoicing, bank reconciliation, bookkeeping and more. Many of these systems offer a free trial. It is best to try the system before buying in order to find the best fit for the spa's needs.

Seek advice. It is worthwhile to use the services of an accountant or work with a qualified business counselor before and during the loan process. A professional can help determine the best type of loan to grow the spa, how much money to borrow, and how to use the proceeds. Check with a local SBA office to find a Small Business Development Center (SBDC) in the area. SBDC advisors provide a variety of free business consulting and low-cost training services that include lending assistance.

Consider a SBA loan. SBA loans have some of the lowest interest rates, longest terms, and lowest monthly payments in the marketplace. If skin care professionals can secure a SBA loan quickly from an online provider, they may find that option to be helpful and beneficial. SBA loans can be used for a wide variety of reasons, including working capital and consolidating high interest debt.

Professionals should avoid borrowing in a way that can end up backfiring or keeping the spa from fully benefiting from any additional funds. The more they know before going into the application process, the better the chances are that they will get low-cost funding without a lengthy process.