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Loans for Creators – Everything You Need To Know

Content creators are all over the internet in the present times. They form a prominent part of digital marketing and promotion. Creators are one of the legitimate businesses though seen that way yet. Creators are also media entrepreneurs and part of the startups. All the assets they create are their audience and the audience’s trust. Even though people love to watch the content, content creation is not seen as something other than a real job. With that said, how do lenders see creators as borrowers? Let us read on to know more.

What is a creator?

A Creator is a person who creates content and posts on their social media platforms. Content creators entertain their followers and use their content to prompt brands and products. Content creation is becoming a real job nowadays, and one can make real money by simply creating highly-engaging content.

Creators and income

Creators mainly earn money through advertising on social media platforms like YouTube. When the audience clicks the ad, revenue is generated and shared between YouTube and the creator. In addition, successful creators also make money through sponsorships which helps to increase income. 

Is the creator’s economy growing?

In the present digital world, investors are angling toward the creator’s economy. Present-day startups are interested in the creators and are keen to fund them, which will help the creators build their space, create engaging content, build an audience, and sell products. Creators are seen as content entrepreneurs and are a substantial market for FinTech companies. Creators can always opt for venture capital and small business loans with favorable rates if their papers show a consistent income. However, there are lending apps that offer loans to the creators.

Everything You Need to Know About the Creator Economy

Credit options for creators

Creators can opt for credit as freelancers or sole traders of business. Lenders may want additional documentation from the sole proprietor or freelancer to prove the income is credible. Banks, online lenders, and the US Small Business Administration have credit options for the self-employed, and business credit cards can help cover small, everyday business expenses. Personal loans are also a good option for entrepreneurs not qualifying for business loans.

Business loans 

As a self-employed, one can apply for business loans. The various options for a business loan are:

Bank loans

You may have considered applying for a small business loan if you need to borrow a certain amount to cover your expenses. You must have been in business for years and have good or excellent personal credit to qualify. However, the lender may require the provision of a personal guarantee. The individual may be liable for the debt if the business goes bankrupt. Other lenders require borrowers to pledge assets such as liens on real estate or business assets so that they can be seized if the debt is not paid. 

Microloans

Micro credits are small loans made by non-profit community-based lenders and guaranteed by the SBA. This program targets business owners who need help qualifying for traditional business loans. As such, microcredits are generally easier to access than term loans or lines of credit. 

Business cards

Business cards are an easy option to raise small amounts quickly and help build your business credit history to qualify for larger loans in the future. Business credit card limits, interest rates, and the annual fee may vary depending on each applicant’s credit history. Similar to personal credit cards, some business credit cards offer perks such as cashback, 0% annual interest introductory periods, and travel points and miles. Also, be prepared to provide details about your business, such as legal form, estimated monthly costs, and employer identification number. 

Line of credit

Lines of credit allow business owners to borrow money when needed and repay purchases over time. You can use the line of credit to offset seasonal cash flow problems or invest in purchases that help your business grow. Lenders charge interest only on what they borrow. Lines of credit usually offer higher limits than credit cards. However, the qualification is more complex and may require several years of established business experience. 

Online lenders

Online loans often have less stringent requirements than banks or loans. Borrowers are eligible if they have been in active business for at least six months and have a personal credit score of 600 or higher. However, this type of financing is usually more expensive and can have shorter repayment terms. Overall, this type of financing could be an excellent alternative for companies that either don’t qualify for the bank or loan or need immediate financing. 

Personal loans

Personal business loans are for self-employed people who have not been in business long enough to qualify for a business loan, who want to avoid high-interest rates from online lenders, or who lack collateral for their business. It can be a solid source of funding loans. However, business loans typically offer more significant loan amounts and longer repayment terms. If there is any trouble qualifying for a loan, adding a co-guarantor may help. The co-signer gives their name and signature to the loan and guarantees the bank will repay the loan if they cannot. This allows you to build your credit while borrowing the funds you need. Co-signatories do not have access to credit funds. 

How hard is it for a creator to get a loan as a self-employed?

Self-employed people generally have the same lending criteria as more formally structured businesses, which can make the loan application process more rigorous. From a lender’s perspective, self-employed entrepreneurs often face higher funding risks than more formally structured businesses such as limited liability companies and corporations. With no legal separation between independent contractors and the business, an entrepreneur’s assets can be at risk if the business faces any trouble. This can affect your ability to pay your loan on time, even if you meet the lender’s requirements. Lenders usually have minimum business duration, annual income, and loan requirements. Be prepared to submit business plans and financial statements, including tax returns and bank statements, to prove your ability to repay your debts.

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