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BUSINESS LOANS
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Small Business Financing Options Available:
Short-term Loans
Lifeline in an emergency, whether facing medical crisis or car repair.
Long-term Loans
Carry repayment terms of more than five years.
Business Line of Credit
Loan with more flexibility than a regular business loan.
Equipment Financing
Upgrade your equipment and free up working capital.
Merchant Cash Advance
Repay with set a percentage of credit card transactions.
SBA Loans
SBA reduces risk and enables easier access to capital.
Business Credit Cards
Business credit cards from better bonuses and rewards.
Business Loans
Applying for a business loan comes with a great deal of research and preparation.
On one hand, applicants might spend time comparing lender types in order to make informed choices about which type is most likely to approve their application. Often in cases of small business loans, smaller banks and lenders are more reliable than large banks, as they are more willing to assist customers who do not operate under large corporations or do not yet have a lot of collateral.
In addition to determining which lender type is ideal, it’s beneficial to learn about loan types and which conditions will best suit a company’s needs. This way, when the company is aware of what sort of loans are available, it’s easier to prepare for what’s required in order to qualify.
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In addition to determining which lender type is ideal, it’s beneficial to learn about loan types and which conditions will best suit a company’s needs. This way, when the company is aware of what sort of loans are available, it’s easier to prepare for what’s required in order to qualify.
Types Of Business Loans
Depending on the company’s needs and financial history, there are several types of loans available to business owners.
No two loan types are exactly the same, and because each is designed to suit a specific need, it’s beneficial to carefully examine the terms and conditions of each business loan type.
Small Business Administration Loan
Small Business Administration (SBA) loans are government-backed loans that are available to small businesses. Because they’re secured loans, they require collateral in order to be approved. There are three subtypes of loans in the SBA loan group including
7(a) Loans for small businesses which vary in value from $350,000 to $5 million
Microloans which vary from $10,000 to $50,000 and are ideal for businesses with limited collateral
CDC/504 loans, which are long-term loans with fixed rates. They typically cap at $5 million and can last 10 to 25 years depending on the loan’s terms.
Certain conditions apply for SBA loans, including the fact that these businesses must reside in the US and cannot be a nonprofit business. Additionally, SBA loans cannot be used to repay delinquent taxes.
7(a) Loans for small businesses which vary in value from $350,000 to $5 million
Microloans which vary from $10,000 to $50,000 and are ideal for businesses with limited collateral
CDC/504 loans, which are long-term loans with fixed rates. They typically cap at $5 million and can last 10 to 25 years depending on the loan’s terms.
Certain conditions apply for SBA loans, including the fact that these businesses must reside in the US and cannot be a nonprofit business. Additionally, SBA loans cannot be used to repay delinquent taxes.
Business Term Loan
Like many other loans, a business term loan is a lump sum loan (generally $25,000 to $500,000) that is paid back in installments over a period of time determined in the loan’s terms. Typically, business term loans last from one to five years, and the interest rate is fixed, usually between 7% to 30%.
These loans are designed to help businesses finance large purchases and fortunately, there are few restrictions on these types of business loans.
These loans are designed to help businesses finance large purchases and fortunately, there are few restrictions on these types of business loans.
Receivable Financing
Loans of this short convert sales on credit terms into cash. These types of loans are ideal for companies that provide services for clients that may have resulted in uncollected invoices. With this loan, the company can choose to sell the uncollected invoices to a third party in exchange for advance payment. The buyer (also called the factor) then collects on the debts they have purchased.
These loans are typically not a borrower’s first choice, as they can result in significant interest rates and other fees. However, if a small business needs to buy time to develop sustainable financing and have exhausted other options, receivable financing might be an acceptable option.
These loans are typically not a borrower’s first choice, as they can result in significant interest rates and other fees. However, if a small business needs to buy time to develop sustainable financing and have exhausted other options, receivable financing might be an acceptable option.
Working Capital Loan
A working capital loan is usually a smaller, short-term business loan designed to allow businesses growth and expansion. They can be used to pay down debts, take care of inventory, cover an emergency, or pay for advertisements.
These types of loans are usually approved for individuals with a clean credit history, and their processing typically takes several weeks to a couple of months to complete. Fortunately, they tend to have relatively low-interest rates, between 3% to 7%.
These types of loans are usually approved for individuals with a clean credit history, and their processing typically takes several weeks to a couple of months to complete. Fortunately, they tend to have relatively low-interest rates, between 3% to 7%.
A Business Line of Credit
A business line of credit is similar to a personal credit card, but it’s used for business purposes. Credit approval and limits are based on the information discovered in an applicant’s tax returns, business information, and bank account information.
This option allows borrowers to continually use and repay the credit card funds that were approved as needed, and with reliable payments, there are often options that allow borrowers to increase their credit limit over a span of time.
Additionally, collateral is rarely needed for business credit cards, unless the line of credit requested is significantly high.
This option allows borrowers to continually use and repay the credit card funds that were approved as needed, and with reliable payments, there are often options that allow borrowers to increase their credit limit over a span of time.
Additionally, collateral is rarely needed for business credit cards, unless the line of credit requested is significantly high.
Merchant Cash Advance
Unlike the rest of the loans covered, a merchant cash advance is a cash advance that’s based on a company’s credit card sales. A cash advance is a quick way to obtain cash for businesses that mainly rely on credit and debit card sales, being that the sums of these sales can be exchanged for money that’s typically available within a day following approval.
Lenders of merchant cash advances collect their fees in terms of a portion of the borrower’s future sales or by taking a fixed sum daily or weekly. These arrangements typically have high annual percentage rates and companies who use them need to be able to keep up with payments in a timely manner.
Lenders of merchant cash advances collect their fees in terms of a portion of the borrower’s future sales or by taking a fixed sum daily or weekly. These arrangements typically have high annual percentage rates and companies who use them need to be able to keep up with payments in a timely manner.
Because businesses tend to need funds for a variety of different reasons, business loans are usually very flexible when it comes to fitting a need.
Though some loans can be more difficult to qualify for or require more time to process, there are financial solutions that are designed to assist companies throughout a wide array of challenges they meet as their business develops and expands.
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