Are you a small business owner with a goal of expansion? Did you know that a 57% acceptance rate is seen for small business loans?
Preparing for growth can mean receiving adequate business funding.
Knowing the lowdown on small business loans can help you achieve your entrepreneurial aspirations. The trick is knowing not only the different types of small business loans but what they entail.
Not sure where to start? Keep on reading, we’ll break down the different types of small business loans for you.
Small Business Administration (SBA) loans
The Small Business Administration (SBA) provides small business loans which can be used for a variety of needs, ranging from initial startup capital to purchasing equipment and more. The loan is intended for a small business and is a great tool for entrepreneurs who need funding but lack the credit and the equity often associated with larger business loans.
These loan programs can provide working capital. The loan helps with debt consolidation, refinancing, and even assistance in purchasing real estate.
SBA loans can vary in size, interest rates, and collateral requirements. They must all meet certain criteria and meet the SBA’s standards for lending. Businesses must show the potential to repay the loan to be considered.
SBA loans are an invaluable resource for small businesses and entrepreneurs. The variety of loans available makes it easy to find the one that is best suited to your needs.
Merchant Cash Advances
Merchant cash advances provide a lump sum of money to a business in exchange for the right to retrieve payments from future credit card sales. This type of loan is suited for companies that process a high volume of credit card sales. As the business makes credit card sales, a percentage is taken from each sale to pay back the loan.
Borrowers have the choice to pay back the loan faster by increasing the percentage taken from future sales. For businesses with seasonal sales cycles, merchant cash advances enable businesses to take out a lump sum at the start of the season and pay it back with the sales throughout the season.
Term Loans
Term loans are a popular small business loan option, as they are generally of longer duration than other loan types and can be used for any purpose. For a term loan, you receive a lump sum that you pay back in fixed periodical payments, including principal and interest payments.
The loan option is flexible, as repayment terms can range from 1 to 25 years. You can accept variable or fixed interest rate options. Some advantages of term loans include long repayment terms, lower interest rates than working capital loans, access to larger loan amounts, and repayment of principal and interest.
Term loans can be used for purchasing or expanding a business, increasing working capital, or for added business investments. When considering a term loan for your small business, it is important to review interest rates, repayment timelines, and loan components to ensure you get the most beneficial terms and conditions of the best business loans.
Know the Different Types of Small Business Loans
Small business owners should review their finances and business goals to decide what type of loan is the best fit for their individual needs. Many lenders offer competitive rates and terms for every type of loan, so compare multiple lenders and the many types of small business loans to find the best option for you. With the right loan, your business can reach its full potential.
