5 Things AI Developers Must Do Before Taking Business Loans

AI developers might need business loans to finance their new projects, so they have to pursue them carefully.

take out a loan the right way when developing an AI project
Shutterstock Photo License - JARIRIYAWAT

AI developers can make a lot of money if they create the right applications. However, they might need to get a business loan to finance their undertaking. This is going to be easier said than done, since many AI developers don’t have backgrounds in finance and need to think like businessmen rather than coders.

AI Developers Might Need Loans to Take Advantage of the Growing Opportunity for AI Applications

Are you trying to take advantage of the growing demand for artificial intelligence technology? You are making the decision at the right time, since more businesses than ever are investing in AI.

The market for AI technology is projected to be worth over $422 billion by 2028. A growing number of entrepreneurs are trying to capitalize off of this growing market. If you have a background as a developer, you can create valuable AI applications that could be in huge demand.

Unfortunately, creating an AI application is not easy. You are going to need considerable capital, which is hard to come by. You might need to get a business loan.

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Applying for the first small business loan can be quite a headache for a budding entrepreneur. It’s quite natural, to be honest. After all, you must do a lot of planning, paperwork, and a few proceedings you never did before. Also, the risk of making a mistake and losing it all is still there hanging over your shoulder like a guillotine.

Thus, before you make a move forward, we’ll ask you to take a critical step or two first. You will find a few of them here, in this article. But, if you want to know anything else, we’ll ask you to comment below. We’ll try to answer your question as soon as possible.

Things To Keep In Mind Before Taking A Loan for Your AI Project

You are planning to get a loan for your new AI program that are you are developing. You might have a great idea, but you have no idea where to start.

When it comes to taking a loan, you should consider quite a few things at the very beginning. For example, you must always look for someone who’s capable of getting your cash loans wired in 1 hour. This way, you can get your money quickly and use it effectively.

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Apart from that, you must always –

Start With A Proper Business Plan

Convincing a lender, especially if you don’t have a proper credit score, can be difficult. Thus, if you want to make it easier for you, we’ll ask you to create a proper business plan.

It will work almost like a selling point to your request. If it’s decent enough, the lender might end up agreeing to finance your venture as well. So, that’s a win-win for you!

This is the hard part for many AI developers. They have an idea for a great program that will use AI to solve a problem, but they don’t know how to monetize it. They will need to come up with a game plan.

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State The Amount And Purpose Of The Loan

Secondly, when you’re making a request, you’ll want to clearly state the amount you want to start your business. Add it in a number as well as in a letter font to make it more convenient.

Apart from that, we’ll also suggest you spare a paragraph and add the purpose of you taking the loan. Writing the business plan, as we’ve said before, can be quite easy as well.

When you are developing an AI application, your costs are probably going to mostly come down to hiring coders and beta testers. However, you will probably have other costs that you aren’t anticipating. You will have to think about all of them.

Prepare Your Financial Statement

If you want, you can also provide a history of your finance management to the lender as well. It will be a testimony of you being “good with money.” 

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Besides the aforesaid, we’ll also ask you to share how you want to use the money. Sharing a little bit about your business plan’s financial goals can also be quite helpful here.

Have A Proper Idea About the Collateral

It’s okay to take a loan to curate the base of your business. However, you should never take a huge amount of money that you cannot repay to your lender. It’ll be a mess that way.

Additionally, before lending you the money, your lender might ask you about the worth of the collateral. So, don’t forget to make the calculation beforehand and present it accordingly.

Do Research Your Options

Whether you believe it or not, you’ll have more than one option to choose from when talking about the lenders. Here’s what you need to know about them –

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  • A traditional bank loan can be quite tricky to secure due to the stringent rules it comes with. However, the terms will be much more favorable in this aspect.
  • On the other hand, a government loan will be even more favorable than a bank loan. But, you’ll need to have a credit score of 720 or more to get it.
  • If you want, you can also use a business credit card in this aspect. It works like a normal credit card where you have to pay the required amount monthly.
  • A merchant cash advancement can be repaid with a portion of credit and debit card payment. You can also choose to pay it daily, weekly, or monthly.

Besides, you can also choose a long-term loan from a personal lender. It’ll be mostly ideal for a larger amount and come with a rather not-so-favorable interest rate.

Taking A Loan Is Beneficial But Risky for AI Companies

You might need outside capital to finance the development of new AI software. This is likely going to require you to take out a business loan.

Taking a business loan can, indeed, be beneficial for your business. However, there will be a lot of risks oriented to it as well. 

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Therefore, before you make a decision, we’ll ask you to get your planning done accordingly. We’re pretty sure that you won’t want to let it all go haywire.

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Sean is a freelance writer and big data expert. He loves to write on big data, analytics and predictive analytics.