How To Use An Installment Loan To Start Your Online Business

If you are unsatisfied with your traditional job and think you could be happier or make more money starting your own online business, you are not alone. According to recent surveys, 40 percent of American workers are expected to be freelancers by 2020. This includes writers, web developers, artists, transcriptionists, accountants and more. If you think you have a marketable skill and want more control over your income, it may be time for you to start your own online business. However, getting the startup capital is not always easy if you are in a time consuming, low paying job at the moment. An installment loan can help bridge the gap between your traditional job and your online career, getting you started sooner. 

Starting Costs 

Starting an online business is much less expensive than opening a physical store. However, there are some startup costs. Here are some examples.

  • Website. You will need to pay for your domain name, hosting, and design for your website. This can be done quite cheaply if you use free or low-cost themes and basic hosting. 
  • Office Equipment. You will probably work from your home in the beginning, which is basically free. However, certain equipment, like a new laptop or a comfortable office chair, can increase your efficiency.
  • Training Materials. If you are not already an expert in your field, you will want to purchase some resources to get you started. Even if you are an expert, you may need some resources on how to start and run a business or accounting basics. 
  • Raw Materials. If you will be making and selling a good instead of a service, you will need your first batch of materials.  

How To Get An Installment Loan 

The great thing about an installment loan is that after you are approved, the money is deposited into your bank account almost immediately. This means you will be able to get started with your business right away. What you need to get a loan varies from company to company, but usually you need a form of identification, your bank account information, and your social security number. 

Some installment loans need collateral, and are usually issued against the item you are purchasing with the loan amount. If this is the case, you should use the loan for your large purchases of office equipment and save your personal money for small expenses. Other loans require proof of income, in which case you may want to start your business in phases, taking out your loan for your website and equipment after you have a few solid clients. 

Paying Back Your Loan 

Usually installment loans last for six months, and payments are made either once a month or every two weeks. It is important that you are able to make all of your payments, so you should not take out your loan before you have clients lined up to generate an income. If you are concerned that you will not be able to make your first couple of payments, you may want to work part time on your business while continuing at your current job to pay off the loan. 

If your business is going well, you can usually pay off the balance of your loan and only be accountable for the interest that has accrued until the date of your payoff. 

Startups often get stuck by not having enough liquidity to meet the needs of their business. Taking out a small installment loan can give you extra flexibility during the first six months of your new business and can ultimately make the difference between your success and failure as an entrepreneur.