Business loans are the best way a new or existing business can get a financial push. Business loans can help your business take off, expand, or even take care of some of your cash flow problems.
There are a lot of different options out there but no one size fits all solutions.
Depending on your credit score and credit history, you may face rejection from banks and other lending institutions.
You’re not down on your luck yet.
Do you need to get funding for your business? If so, continue reading to learn more about the types of business loans available.
Bank Term Loan
Bank term loans work much like any other bank loan. You borrow an amount of money you’ll pay back with interest over a set period of time.
Unfortunately, these loans can be difficult to secure for small businesses. These loans are often large and used to buy real estate, acquire other businesses, renovations, or long-term expansions.
To get a bank term loan, you’ll need a strong credit history and established business.
Business Line of Credit
Business lines of credit work similar to a credit card. An institution will approve you or your business for a certain amount of credit. You can use the credit whenever you need as long as you pay it back.
This type of loan is often available to businesses with lower credit ratings.
Interest rates range from about 7% to 25%, depending on the institution and borrower’s creditworthiness. Terms can range from 6 months to a year or longer.
This type of loan comes with quick approval and flexible usage. They’re good for businesses who need emergency funds or who have less than ideal credit.
Businesses can use an installment loan for a variety of purposes. Businesses will pay back the loan with equal monthly payments covering both principal and interest amounts.
You’ll receive the full amount of the loan upon signing the agreement. However, keep in mind the term will always correlate to the loan’s use.
This means you must have a set purpose for the loan going into the agreement.
Although monthly payments are most common. Installment loans may also come with quarterly, half-yearly, or annual payments.
The Small Business Administration offers funding to small businesses, entrepreneurs, and startups. This makes loans available to businesses who wouldn’t normally qualify, such as startups.
Businesses must go through an SBA certified lender, which can give loans ranging from $5,000 to $5 million.
Specific terms and interest rates will vary per lending institution and creditworthiness.
Types of Business Loans to Choose From
Funding a business can sometimes seem impossible. If at first, you face rejection, get up and try one of the above options.
Different types of business loans will be more or less difficult to secure. You may need to do some research and shopping with lending institutions.
Are you looking for more valuable business advice? Check out these articles about startups.