Why Car Title Loans Are a Great Form of Alternative Business Funding
Canadians have found confidence in the economy as the COVID-19 pandemic reduces in severity. New business openings have steadily increased, and have reached pre-pandemic levels.
Starting a new small business takes cash, though. You can’t get inventory together or new office equipment without money. If you don’t have seed money and your idea doesn’t attract investors, what do you do?
Consider alternative business funding routes. Some business owners, for instance, look to car title loans to support their new ideas. Even if you want a grant or other form of funding, such a loan can help you get started.
In this article, we’ll look at what a car title loan is and why it might help you start your business.
What’s a Car Title Loan?
When you get a car title loan, you negotiate with a potential lender for a sum of money based on the value of your car. Some car title loans come in at just a few thousand dollars. Lenders vary, but we can offer you up to half of the vehicle’s wholesale value. The wholesale value is determined by several factors, such as the year, the number of kilometers, the condition of the vehicle, options & accessories and even the trim level.
Once you and a lender agree to terms, the lender places a lien on your vehicle. This ensures that the debt follows the vehicle until it’s paid in full.
What’s a Lien?
Liens note that a debt has been registered against a piece of property. Vehicles typically only have one lien registered against them. Houses can houve several mortgages registered, but vehicles usually always have just one debt registered agains it. These ensure that a debt attached to a vehicle remains attached to the vehicle even if it has been sold.
Liens prevent the transfer of ownership of a vehicle. Before a new owner can register the vehicle, the lien must be removed. This prevents fraudulent sales of vehicles with debts attached. The lien creates mutual trust between the lender and borrower.
Car title loans fall under the general category of secured debts. The creditor can claim the vehicle if the debt goes unpaid.
In practice, events like these make up a small percentage of such loans and serve as a last resort for a lender. A lender does not want the hassle of taking your vehicle and will go to huge efforts to accomodate a borrower’s particular situation if he or she faces hardship.
Why Look for Alternative Business Funding?
Financing a business yourself requires taking on significant risks no matter how you get there. In the ideal situation, you would have enough money to start your business on your own. In practice, however, most people lack that kind of money.
Different types of funding work well at different times in a business’s life cycle. If you have a great startup idea but poor credit and little in the way of cash on hand, a short-term loan like a car title loan can get you started.
Forward-Thinking Ways to Use a Car Title Loan for Business Funding
If you don’t have an expensive car, you may not get a lot of money from a title loan. This doesn’t mean a car title loan can’t help you on your way, however.
Starting a business involves a lot of small expenses before getting to the meat of stocking shelves or offering services. Many business owners hire others to perform common tasks necessary for a business to start garnering investments or higher-value loans.
Stumped on how to use your business funding to gain momentum? We’ll provide some ideas.
Hire a Grant Writer
The Canadian government offers loans and grants to businesses and non-profit organizations. Not everyone has the knack for navigating the large array of grant options or submitting proposals.
That’s where a grant writer comes in. Grant writing services can connect you with larger sources of funding for your business.
If you go this route, put your money toward finding a good grant writer and an appropriate grant. Once you have a grant, you can start putting the grant money toward larger business expenses. Depending on the terms of the grant you may also be able to pay back the loan itself.
Get a Web Presence
Even if web design has never been easier, some business owners don’t have the knack. Web design requires a mix of technical and aesthetic skills. If you don’t have those skills, you’ll need to pay.
By investing in your online presence, you can drum up more business faster. This will get to the point at which you can start paying back that loan.
Advantages of Car Title Loans
When it comes to starting financing a business, car title loans and other similar systems offer some unique advantages. We’ll go over a couple of the largest ones.
Moving at the Speed of Opportunity
Some opportunities in the business world present themselves and disappear the next instant. If you need money to pounce on an opportunity that might disappear within a week, a car title loan can get you started and will do so quickly.
Less Worrying About Bad Credit
If you’ve had a hard time or a bad previous business endeavor, you might have bad credit. Because a title loan has been secured against a vehicle, a creditor will be more inclined to lend to you even if you have poor credit.
Get Your Business Started Now
Don’t let a bad credit history, a failed business or other hardships in life kill your new startup idea before it gets off the ground. Seeking alternative business funding like car title loans can help you get your business going. Our slogan is “We focus on your future, not your past”. In our loan approval process we do not focus on past bad events, but rather look at the equity in your vehicle and your future. Then, once you are approved for a loan it will be up to you to make good use of the funds.
If you’re an Ontario resident looking for small business funding, we’re here to help. Contact us today with any questions or comments you have. We provide car title loans, motorcycle storage loans, and repair loans.