When it comes to small business loans, there is no option that is one-size-fits-all. Each loan type comes with its own terms, rates, and qualifications. Here are a few types of business loans that are available to small business owners. You can go through them and choose the one that best fits your business.
The most common type of business financing, a term loan is one that helps you get a lump sum of cash up front. You will then have to repay this loan along with interest over a specified time period. However, you will need to offer collateral or a personal guarantee which the lender can sell in case you default.
SBA loans are loans guaranteed by the Small Business Administration. They can help you get large amounts at low rates and come with long repayment terms. However, the application process is lengthy and strict.
Business lines of credit
More flexible than term loans, business lines of credit give you access to funds up to a certain maximum credit limit. You can withdraw money from this credit line as per your requirement and pay interest only on the amount that you have withdrawn. Although typically unsecured, business lines of credit come with many additional costs.
If you want to buy equipment for your business, an equipment loan may be your best option. Here the equipment that you buy will serve as collateral and the rate and term depends on the value and expected a life span of that equipment. You might have to however make a down payment.
If you are finding it difficult to wait until your customers pay their invoices, invoice factoring can help you get money until you get paid. Here the factoring company will buy your invoices at a discount and then collect the amount from the customer when the payment becomes due. You can also try invoice financing wherein you can use your invoice as collateral to obtain your cash advance.
Merchant cash advances
If you are a business that is making a decent sum of money through credit card sales every month, a merchant cash advance is one option you can try. The lender gives you lump sum cash upfront in exchange for a portion of your future credit card sales. Yellowstone Capital LLC is one such lender who can help you get instant cash through a merchant cash advance.
You can get more information about more such loans to fund your business. Click here to read more from contributor. Nevertheless, before signing up for any type of loan make sure you go through the terms carefully.