As a business owner, you might often think that you are out of options if you do not get an instant cash loan from a bank. However, this is not true. There are a variety of business loans available in the market today. However, before you begin searching for the best business loan, you must be aware of them properly.
Finding suitable sources of funding for your business can be difficult. There are many types of available financing, investments, grants, instant cash loans, etc. Each has its application process and set of rules.
The most common method of acquiring funding for small businesses is through a business loan. It may seem as if small business funding is straightforward to obtain, but it might not be as clear as it might seem. Here are some of the typical business loans available in the market today.
- Term loans
Term loans can be helpful for business owners who want to invest in specific business areas or for those who need working capital on an ongoing basis. Some of the reasons why you might use a term loan include:
- Buying real estate
- Acquiring another business
- Investing in remodeling or renovating commercial space
- Planning long-term business expansion
- Short-term loans
There are many similarities between short-term and regular term loans; the most significant difference is the repayment period. You will need to repay the debt over a shorter period when you go for a short-term fast loan. Some lenders offer short-term loans with tenures ranging from 3 to 18 months for smaller amounts.
- A business line of credit
Using a business line of credit is similar to taking out a loan for your business, except you pay interest only on the portion of money you borrow. As long as you do not exceed the credit limit, it works similarly to a business credit card in that you can use funds when needed and repay them as you can. A business line of credit payment method is an excellent choice for businesses looking for an easy way of managing cash flow, buying inventory, or paying for surprises.
- Small Business Administration (SBA) loans
SBA loans are government-backed loans available to small businesses from private-sector lenders. These are collateralized loans, meaning you must pledge assets from your company or personal portfolio as collateral. SBA loans are suitable for business owners with excellent credit-seeking long-term loans.
- Equipment financing
You may use an equipment loan to finance the cost of buying new equipment you will require in your business; the equipment will be used as collateral for the loan.
- Invoice financing
You can avail of fast cash from the invoice financing companies based on the outstanding invoices associated with your business. You can enjoy up to 85% of the due invoice. If the invoice remains unpaid, you are charged a factor fee weekly. Invoice financing benefits B2B businesses with cash flow problems stemming from unpaid invoices.
- Working capital loans
Work capital loans are short-term business loans that lend extra cash to businesses to finance growth, expansion, and day-to-day expenses like advertising, payroll, and inventory purchases. Additionally, working capital loans can also be used to pay off debt or cover emergency costs.