Are you thinking about taking out a loan for your small business? You may be amazed at the number of different types of loans that are available to small business owners. Here are some of the types of loans you may be able to apply for.
Accounts Receivable Financing
If your business is new or your credit is not great, accounts receivable financing could be the solution for you. This type of loan is secured by the accounts receivables of your business. Your own creditworthiness is not as important. You can be approved for an accounts receivable loan fairly quickly, putting cash in your hands when you need it.
SBA Loans
The Small Business Administration (SBA) guarantees certain loans to small businesses, so these loans are less risky for banks to offer. The application process can be lengthy, and the rules are very strict, but SBA loans are great if you qualify for them because of their low interest rates and favorable terms. You can obtain SBA loans in amounts from $30,000 to $5 million.
Lines of Credit
A small business line of credit is great because you can set it up in advance and then borrow only what you need at the time you need it. It works similarly to a credit card. You have a spending limit, and you only have to pay interest on the amount that you actually borrow. You may need to pay an initial fee to set up the line of credit and an annual fee to renew it.
Term Loans
A small business term loan is what you would think of as a traditional loan. You borrow the full amount you need at one time, and you make monthly payments. The monthly payments can be for the interest only, with a balloon payment at the end of the loan to repay the principal, or the loan can be structured to pay back the principal monthly in increments along with the interest. The interest rate on these loans can be variable or fixed. The loans can be secured by collateral or unsecured. Term loans are good for large one-time expenditures.
With the large variety of loans that are available for small businesses, you are sure to find one that fits your needs and qualifications. You can find these loans online, at large commercial banks or at small local banks. If your business needs cash for startup purposes, expansion, unexpected expenses or emergencies, don’t let these situations stump you. Research the multitude of loan types that are available to you.