Settling on Office Space Rental

March 3, 2014

Some businesses that are looking for an office space rental might need to take out a business loan. Before doing this, business owners should consider the key issues faced by small businesses. For small business owners seeking an office space rental they should know that first, their company will have two methods of raising their capital and these include equity contributions and loans. While loans come with obvious disadvantages, both sides should still be considered, especially when you are trying to take out a loan for an office space rental. Naturally the first hesitation for small businesses when taking out a loan to pay for an office space rental is that you will be required to pay back the loan with interest whether or not your business is successful.

However, there are many advantages to taking out a small business loan for an office space rental. Typically, should your company do well you will only owe the lender the interest return on the loan for an office space rental and not any profits or shares in your company that an equity investor might seek. There are many types of lenders including banks or individuals. When you are negotiating a small business loan for an office space rental you want to set the date when the loan should be repaid entirely. You can formulate this in one lump-sum at the end of the term or you can formulate period payments with a final larger payment in set installations. No matter which option you choose you will incur interest.

The interest payments on a small business loan for an office space rental will be established by the lender. It will be clearly defined before signing for the small business loan for an office space rental and will generally be applied as monthly interest on each monthly payment. As a small business owner you should be cautious and informed about any loan fees that are charged up front for processing. If you request an estimate early on you will be able to better evaluate your potential small business loan package.

Prepayment is ideal and if your company can pay off your loan prior to its due date that will reflect well on your credit score. However, you should ensure before the time of signing that you will not incur a fee for paying off your loan early and that you will have this flexibility available. As a new small business that may or may not be successful, your agreement will require that the lender outline defaults. A default should occur after many failures to make any payment on time, insolvency, any breaches in the obligations, or bankruptcy.

As part of the loan you should also arrange for a grace period which states that while your monthly payments might be due on the first of each month, you have a grace period until the fifth before the payments are considered late. Be sure to also get a reasonable late fee. Be aware that as a new small business owner you might be required to have a co-signer for your small business loan.