Business
Types of Business Loans
Business Loans
No matter what kind of business you own, you’ll encounter a time when you have to make an investment, cover a receivable, support a working capital need, or address a number of other issues. For those reasons and more, it’s a good idea to consider a business loan.
But it’s not always that simple to get a business loan. Business lenders want to know what you’re going to do with the money, on top of knowing that you have the capacity to pay it back.
Thankfully, there are different types of business loans out there to meet your specific needs. Keep reading to learn more about business loans and what they can do for you.
Term Loans
A term loan is a type of business loan that gives the borrower a specific sum of money upfront, with all payments due back in a lump sum after an agreed period of time. Term loans can be used for funding a business, purchasing equipment, real estate, and other investments.
Repayment terms can range from one to 10 years and can be secured by collateral or unsecured, though usually the higher the loan, the greater the collateral required. Interest rates can vary and are typically higher than other types of financing, making it ideal for short-term needs.
Term loans are widely available to businesses of all sizes as long as they prove enough creditworthiness and a strong credit history. As a business, it is important to have a repayment plan in place so you can repay the loan on time.
SBA Loans
The Small Business Administration (SBA) provides loans to entrepreneurs to help them purchase or build buildings, buy equipment, and start or grow a business. There are three primary types of SBA loans: 7a Loans, Microloans, and CDC/504 Loans.
Business Lines of Credit
Business lines of credit are revolving loans that allow businesses to borrow money up to a certain limit and repay it at their own pace. They are usually short-term, usually on a six-month to a one-year term, with a fixed interest rate.
Equipment Loans
Equipment loans give businesses quick access to the capital they need to buy the necessary items and may come with benefits such as lower interest rates or tax benefits. However, it is important to compare loan offers to find the best loan.
EIDL Loans
The Economic Injury Disaster Loan (EIDL) is a loan offered by the Small Business Administration (SBA) to help small businesses and non-profits affected by economic hardship caused by a declared disaster. Businesses can get up to $2 million in funding, with a greatest of up to $200,000 to cover costs not related to payroll.
The repayment terms will vary and are determined by the coordinator of the loan once the borrower is approved. There may still be funds available to those who have already received an EIDL loan, as the SBA offers a more favorable advance of $10,000.
Read more about EIDL loans to see if this is the right option for you.
Advantages Secured Types of Business Loans
Small business owners can reap the benefits of secured business loans if they need financing for their venture. Secured loans give quick decision-making, lower interest rates, and flexible repayment terms that can help business owners get the financial support they need.
Loans through banks and lending companies can give the best choice for those looking for beneficial sources of financing. With all the advantages secured loans offer, now is the time to explore the types of business loans that fit you!
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