5 Types Of Small Business Loans To Secure Your Financing

Young asian business woman discussing about financial planning w

Today’s financial industry is getting increasingly competitive, offering a host of options and attributes to cater to the varying consumer needs. Before taking out any type of loans, it is essential for you to do some research on the different types of financing options to secure the most ideal one that best matches your unique needs. Learn more about the different types of small business loans that can help secure your secure your financing.

Business Line of Credit

For business owners looking for premium flexibility in their financing, a business line of credit is a viable option. The amount of loan can range anywhere from $1,000 to $500,000 and the funds can be disbursed typically within a week or two. For the interest rates, they vary and can range from 8 to 24 percent. Take note that business lines of credit are revolving, so borrowers can access the funds as many times as they need, instead of receiving a lump sum.

SBA Loan

The Small Business Administration (SBA) helps small businesses secure the financing they need to support their operations. Small business owners who have sought help elsewhere but failed to get financial assistance, the SBA can render the necessary help and resources. Borrowers can expect to get financing from $50,000 to $5,000,000 with loan repayment terms that range from 10 to 25 years. One downside that the SBA loan is known for is its exhaustive application process that can take an extended period of time and require a lot of paperwork.

Short-Term Loan

Short-term loans are very popular among borrowers who are looking for fast and convenient financing. The paperwork involved is usually much less extensive and funds can be disbursed within as little as only 24 hours. Short-term loans are highly recommended for unexpected expenses that can include hiring new staff, replacement of equipment, expanding operations, improving infrastructure, and others. The interest rates of short-term loans are typically much higher to compensate the non-requirement of a collateral.

Business Term Loan

A business term loan lets borrowers acquire working capital, purchase equipment, expand their business, and hire new staff. This has been a highly favorable option among business owners for decades as they are highly reliable. Fund are disbursed within a couple of days and can range from $5,000 to $2,000,000. A business term loan can be repaid between 1 to 5 years and its interest rates can start as low as just 6 percent.

Merchant Cash Advance

A merchant cash advance lets you borrow from your future earnings. Once you have gotten approved financing, you will only start its repayment through a certain agreed-upon percentage of your daily credit card deposits which will be withheld by the lender. Merchant cash advances are also fast in terms of funds disbursement within 24 hours and the amount can range anywhere from $5,000 to $200,000. Such convenience can be enjoyed at a much premium interest rate that can start from 18 percent. The application process for a merchant cash advance is also surprisingly simple and there is no collateral involved.