Smart business owners know the importance of maintaining stable cash flow. With this in mind, start-up companiesknow they need to acquire additional funding to keep their business running. Fortunately, numerous financing companies now offer fast small business loans. Whether it’s for buying equipment, acquiring inventory, or real estate, there’s a specific loan that will suit the needs of every start-up business owner.
There are different types of fast business loans available and each of these loans have different terms, rates, and limitations. It’s important to do you research in order to identify which type of loan is best for your business. To make it easier for you, we’ve rounded out four of the most popular financing options for small business owners:
It’s no secret that small business loans have a hard time qualifying for bank-rate financing. The Small Business Administration (SBA) took matters to their own hands and created different types of loans called SBA loans specifically for small business owners. SBA
The SBA doesn’t grant the loan per se, but they partner up with different lending institutions to grant the loans to small businesses. The SBAonly guarantees up to 85% of the loan so small business owners will have a higher chances of approval. By being a partial guarantor, lenders face lesser risks and make financing readily available to small business owners who need it most.
SBA loans are a good option for entrepreneurs who are seeking a long-term loan. It can be used as working capital for expanding or starting a business, equipment financing, or for renovating an existing business property. If you have a good credit score, then an SBA loan is a good product for you to apply for.
Business Line of Credit
A business line of credit is one of the most common types of loans that business owners get. It works like a credit card where owners can take out a specific amount and pay only that portion plus the interest rate within a specific period. This is perfect for covering emergency expenses and helps fill the gaps in the business’ cash flow. Business owners can also use it if they need financing for new equipment or if they’re planning on restocking on inventory.
Business owners can either apply for a secure line of credit or an unsecured line of credit. Unsecured business credit lines usually have higher interest rates and shorter repayment terms because of the higher risk involved. Secured credit lines, on the other hand, are less risky for lenders because collateral is involved which can be seized by the bank or other lending institutions in case of default payments. Either way, it’s a perfect solution for a business’ short-term financial needs.
Businesses like trucking companies and restaurants rely heavily on equipment to keep up with day-to-day operations. Purchasing the needed equipment outright is not practical since it can create a big strain on your business’ working capital. But with equipment financing, owners can borrow cash to buy the equipment and make repayments within a specific time frame.
Equipment financing is available to almost every type of business, even start-up ones and those with lower credit scores. This is because, in this financing option, the hard assets purchased with the borrowed cash becomes the collateral. In case the borrower defaults on repayments, the lending institutions are entitled to confiscate the equipment and sell it to cover their losses.
Term loans are commonly used for buying equipment, working capital, or for acquiring or expanding business. The interest rates are either fixed or variable and the repayment period can last from one to 25 years, depending on the term you and the bank agreed upon. It also requires collateral since it’s a high-risk business for the lenders. They may also require a down-payment from the borrowers to reduce the monthly payments and the total cost of the financing.
Term loans can be categorized into three different varieties, with each one reflecting the lifespan of the loan.
. This type of term loan is usually for business owners who, unfortunately, cannot qualify for a business line of credit. The repayment period is usually 12 to 18 months.
Intermediate-Term Loan :
Repayment periods for this type of loan can last up to 3 years. This is usually used for purchasing equipment and the payment terms are essentially tied up with the average useful years of the asset obtained. The loan is paid for in monthly installments and is obtained from the business’ profits.
This type of term loan can have a repayment period of up to 10 to 25 years and usually requires collateral to secure the loan. Payments are done quarterly or monthly, depending on the payment capabilities of the business owner.
Which Fast Small Business Loan is Right for You?
Every business will need additional financing eventually. Fast Small Business loans can help cover any unexpected business expenses without putting a strain on your working capital. By finding the right financing option, you will be able to leverage your assets and use the extra resources for growth and expansion.Make sure to consult a qualified financial adviser to know which type of loan is suitable for your needs.