Tag Archives: business loans

When to Take on Business Debt

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Running a small business means balancing growth goals with financial responsibility. When borrowing is used smartly – it can help you scale, stay agile, and keep full control of your business. Here’s when it makes sense to take on business debt, the risks to watch out for, and how First Financial may be able to help your Monmouth or Ocean County small business.

When to Consider Business Debt

  • For Growth & Expansion – Moving into a bigger space, buying more equipment, or hiring staff often requires upfront capital.
  • To Seize a Timely Opportunity – Sometimes favorable deals (bulk inventory, discounted real estate, or contracts) pop up, and having access to borrowed funds lets you act quickly.
  • To Build Business Credit – Paying off smaller loans or lines of credit on time helps improve your credit profile, setting you up for better terms in the future.
  • For Smoothing Cash Flow – For seasonal businesses or those with irregular income, a line of credit or short-term business loan may help bridge gaps for payroll or supplier payments.
  • When Rates are Low – When interest rates are favorable, debt can be a cost-efficient way to access capital. Interest is also often tax‐deductible.

Why Debt Might Be Better Than Equity

  • You Retain Ownership & Control – You won’t need to give up business shares or decision-making power.
  • Predictability of Cost – Loan payments will be fixed; equity comes with sharing profits (possibly indefinitely).
  • Tax Benefits – Interest payments are usually deductible, lowering your taxable income.
  • Strengthened Credit Profile – Successful borrowing builds business credit, making future financing easier.

Risks to Watch Out For

Borrowing also comes with responsibilities that should not be overlooked. Loan payments are fixed obligations, which can put pressure on your business if revenue dips. Taking on too much debt increases financial vulnerability, particularly during economic downturns. The terms of the loan also matter, such as interest rate, collateral requirements, and fees – which can all add costs or limit flexibility. If not managed carefully, debt can restrict strategic business choices and impact long-term stability, making it crucial to borrow with a clear purpose and repayment plan.

How First Financial Can Support Your Small Business

At First Financial, we’re here to make the borrowing process easier with flexible lending solutions. Some of our offerings include:

  • Commercial Real Estate Loans to help you expand or invest in property.
  • Commercial Vehicle and Equipment Loans to keep your operations moving.
  • Business Lines of Credit for on-demand access to working capital.
  • We also offer a VISA Business Cash Plus Credit Card for everyday spending needs, and 1% cash back on unlimited purchases.*

​​You can learn more about our business loan offerings on our website. With personalized service and competitive rates, First Financial is committed to helping your small Monmouth or Ocean County business grow smartly and sustainably.

*This APR of 18% is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $35, $10 Card Replacement Fee, and Returned Payment Fee of $35. A First Financial membership is required to obtain a Visa® Business Cash Plus Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Your First Financial Visa® Business Cash Plus Card will earn cash back based on your eligible purchase transactions. The cash back will be applied to your current credit card balance on a quarterly basis and be shown cumulatively on your billing statement. Unless you are participating in a limited time promotional offer, you will earn 1% cash back based on eligible purchases each quarter.

How to Get a Loan if You are Self-Employed

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If you are self-employed, it may be a little harder to qualify for a loan based on other borrowers who can easily furnish a W-2 form. Keep reading to find out how you can still qualify for a loan when you’re self-employed.

Check Your Credit Rating

Your credit history is probably one of the most important factors in qualifying you for a loan. Your credit score is used by lenders to gauge how and if you’ll be able to repay the loan. So if your credit isn’t that great, getting a loan could be extremely difficult – or if you do, you may be paying a great deal more in interest for the loan you’re seeking.

If your credit score isn’t in the higher 600s or above – your best bet may to be to wait before applying, and continue to build your score. You can increase your credit score by paying bills on time, rectify any past due payments, and keep all your lines of credit open.

Need to know your credit score? Visit https://www.annualcreditreport.com/index.action and be sure to check your credit report for errors too. Errors on your credit report can also affect your score, so you’ll want to make sure you review the report in detail to ensure all open lines of credit are truly yours, and that all charges and loan payments are legitimately yours.

Compile the Necessary Documents

Due to the fact that you are self-employed, more than likely your lender is going to ask you for more documents in order for you to qualify for a loan. Here are the most frequently asked for documents, that you’ll want to get organized for at least the last 2 years before you apply:

  • Bank statements
  • Profit and loss statements
  • Tax statements (Your 2 most recent tax returns, schedules and transcripts)
  • 1099 forms

Get Prequalified

Many lenders will prequalify you for a loan first before you actually need to apply. If this is an option you might be interested in, reach out to your lender and ask what might be needed in order to issue a prequalification (where you’d find out the amount you’d be approved for and the loan terms).

Decide About Applying

If you’re happy with your lender’s terms and rate, you’re now ready to apply for the loan. Or if you’ve been researching several different lenders to compare the loan rate that you’d be offered, decide which one you’d like to apply with.

Lenders will typically offer online applications, or you may be able to call and apply over the phone or in person. This is where all the documents from above will come in handy. You’ll be asked detailed questions about your business income and finances. Having everything ready to go in advance will streamline the process.

Await Loan Approval and Funding

Once your loan application is fully submitted and complete, your lender will review your documentation and let you know if you were approved for the loan. Once your loan is approved, the funds will be deposited into your account and you’ll be able to continue to improve your credit rating, finance a large purchase, or fund your business needs.

At First Financial, we understand that not every business is the same – therefore not every loan is going to be the same. We pride ourselves in personalized service and reasonable timelines, keeping your business in mind. Email us at business@firstffcu.com and we’ll be happy to provide you with more information on loans for your business. Or, if you’re self-employed and looking for a consumer loan for personal use – check out the Loan Source page on our website. We have various consumer loans too!

 

A First Financial membership is required to obtain a First Financial loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties in New Jersey. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.

Article Source: CUInsight.com