How to Get a Side Business Loan
Having a side business (especially online) is a growing trend and can be a great way to make money. But getting your side business started can be daunting, especially if you need a little startup capital.
In this article, we’ll take a look at what a side business is and how you can tackle the costs that come with it by saving money and getting a loan for an online side business.
What is a Side Business?
A side business is exactly what the name says – a small business you run on the side. This business is on top of your full-time job and can either be a hobby that happens to make money or can be something you start in order to create an extra stream of income. Having a side business is hard work, but it can also be lucrative if you approach it with the right mindset and attitude!
Unfortunately, side jobs don’t come for free and most of them need some decent bootstrapping to get it running. Like any business, it will probably take some startup investment and will have operating costs.
What’s the Real Cost of Starting a Side Business?
This is not always a straightforward question. The cost will largely depend on exactly what you are doing and how you are doing it. The main thing to remember is there will be costs and it can turn out to be very expensive.
For example, if you want to start some sort of online store (by using Shopify for example) you can usually start with a free trial. After 14 days, however, you have to start paying a minimum of $29 per month. On top of this, you might have to spend a few dollars on marketing tools to get the word out there. If you spend $20 on marketing (by using simple tools like Google Adwords or Facebook Marketing) you’re already pretty much on $50 a month recurring cost.
This is without you necessarily earning any income yet or being guaranteed that you’ll make any money out of it. You’ll also need to buy stock and maybe even get a permit. Point is, the cost can add up really fast! Entrepreneurs report even having to spend $3,000 on their side business before they made a cent!
So yes, a side business can cost you money. But the cost of your side business should definitely not stop you from going for it! There are solutions to funding your side business if you don’t have the cash up front. One such a solution would be to take out loans for an online side business.
What is a Side Business Loan?
A side business loan is nothing fancy or complex. It is simply a personal or small business loan you get in order to start up or fund your side business.
A personal loan is a loan you can take out from private lenders like Stilt. These loans are usually unsecured which means you don’t have to give collateral (like an asset) as security for the money you borrow.
The terms and rates you can get for your loans for an online side business will vary from lender to lender and will also depend on a few personal factors such as your credit score, income and whether you sign with a cosigner. Generally, however, you can expect the following:
- Loan amounts between $1,000 and $100,000
- Repayment terms between 6 months and 7 years
- Interest rates between 5% and 20%
With most personal loans, you’ll be able to get the money within a week, which is great if you have a few holes you need to plug to keep things running.
What is Stilt?
Stilt is a private online lender that focuses on providing loans to immigrants and visa holders. If you are a U.S. citizen or permanent resident you can also apply, but, if you’re not, Stilt is especially a great choice.
How to Take a Side Business Loan with Stilt
You can apply for your loan online. This means you don’t have to stand in long queues or fill out mountains of paperwork! Once you’ve applied, Stilt will send you an update on your application within 24 hours. If you need to give them a bit more info, they’ll schedule a quick verification call with you.
They will take a moment to verify your information and documents, but it won’t take too long. Stilt doesn’t require all the conventional boxes to be ticked before you qualify for a loan. Your credit score or residency status, for example, is not such a big factor as it is with other lenders. You can check out the full list here.
As soon as soon as they’ve ticked all their boxes, you’ll get a promissory note to sign. After you’ve signed, the money will be transferred to your account. The money only takes about 2 to 3 days to reflect in your account, so you’ll have your money and get your side business up and running in no time!
5 Tips to Help Save Money for Your Side Business
Whether you are just starting or you already have a side business running, it’s always a good idea to save on costs – especially in the early days if your income isn’t that big yet. Here are a few tips to help you save money for your side business.
1. Claim Your Small Business Expenses
This is something a lot of side business owners miss, but you can actually claim small business expenses from your side business’ tax. This includes the rent and utilities associated with your side business’ operating space and any equipment you needed to purchase for it. This is a great way to save money – even if it is just by having to pay less tax!
2. Swap Services
Getting your side business up and running will probably mean you will have to rely on the help of other people. Like a designer to help you design the perfect logo or your photographer friend who’ll help you snap some shots for your website.
Not everyone will be willing to help you for free, but some might be willing to trade services. There will most likely be something you can do to help them out, so don’t be scared to ask! If you can keep your starting cost low, then go for it!
3. Presell Your Product
Preselling is a great way to get cash upfront (to help you cover all ever increasing cost) and also establish whether you have a market (before you invest too much too soon). You can start preselling your product or service by offering a sample of your work. People should then not just sign up for the sample but commit an pay upfront for your product or service. Interestingly, studies have shown presales can even boost long-term sales.
4. Automate Savings
The discipline of saving isn’t something everyone has. You’ll probably need to save up a few bucks before you can start your side business, so to help you get there you can set up automated savings. This will mean a certain amount will automatically be deducted from your account every month and stored safely away.
There are even great apps that help you save your “change” when you buy items, by rounding up your purchase and stashing the change (or additional amount) away.
This one can be even more difficult than saving! It is super tempting to spend the money you earn from your side business, but the wiser choice would be to reinvest your profits. This means you have funds available to grow and you don’t have to rely on debt so much. So, turn on the discipline and reinvest!
Don’t let the cost of setting up and running your side business freak you out or kill your dreams. Consider getting one of the loans for an online side business that is available out there. It’s quick and easy and will get you going in no time.