A business is something that is important to any business owner as well as the people who are working in it. You owner will need to be responsible enough to keep the business running for the people who are dependent on the income that they get from the business. If you have a business and you will need assistance on buying another equipment or simply wanting to expand but you do not have enough funds, you can surely go to money lenders and discuss about getting a business loan.
Business loans are loans especially meant for commercial enterprise purposes. Like any other l loans, it includes the advent of a debt, meaning that it will be repaid with a certain amount of interest. There are a number of money lenders that can provide you with different kinds of business loans and there are also banks that can offer you business loans especially if you have already built a relationship with them.
Types of Business loans
Business loans fall under the class of debt financing and it’s a manner to get the money you want to grow your business. This is being offered with the aid of money lenders and in exchange for the cash, they’ll add interest rates on top of the loan amount. Basically, business loans are being paid back over a fixed amount of time with repayments on a regular basis.
Here are the types of business loans that can be availed:
- Term loan
This is the traditional business term loans because it’s possibly what you think of when you picture a business loan. If your business qualifies for a term loan, it will get an agreed upon amount of money that it’s going to pay off that includes the interest rate with monthly repayment schedules over an agreed repayment duration. Term loans offer a huge loan amount so can basically get at least $25,000 up to $500,000. Additionally, they will provide long time loan repayment duration which will give you time to repay for the business loan.
- Short Term Loan
A Short term business loan works like a shorter version of the traditional term business loans. You will still acquire a designated sum of money all at once that you will need to gradually repay, in addition to the interest rate over time. Short term business loan, however, offers a smaller loan amount and should be paid off over an awful lot much less time. It also has higher charges than traditional term loans. Generally, this type of loan can be repaid in a shorter period of time, the amount that can be loaned is lower and the interest rate is higher than that of the traditional term loan.
- Equipment Financing
Equipment financing is basically a loan taken by the business to buy certain equipment that is needed by the business. This is a type of self secured loan which means that the equipment which you purchase with the loan’s proceeds acts as collateral for the mortgage. Also , your loan time period for this type of loan will normally be the projected existence of the piece of equipment you buy with the loan amount. Because the equipment acts as the collateral for your loan, the money lender will be taking on less hazard by lending to you. As such, your rates will be correspondingly low-priced for device financing declining to as low as 8%.
- Invoice Financing
This is another type of self secured loan that gives advances capital to commercial enterprise proprietors who are patiently awaiting pending invoices. You can acquire a loan of as much as 90% of your pending invoices really worth with the bill itself appearing as a collateral to the loan that you are availing. By the time your customer fulfills the invoice which you finance, you will then receive the final amount of the bill minus the amount that the origination fee.
- SBA Loans
Probably one of the most complicated and hard to understand type of a loan, this may just be the easiest and most affordable to pay off. SBA loans are long time period loans being offered by banks in which might be in part guaranteed via a central authority entity known as the Small Business Administration. If a borrower is not capable of paying an SBA loan, then the SBA will pay the lender the amount that they guaranteed. Because of the guarantee, lenders are taking on much less chance by lending to a small enterprise and this mitigates the risk that makes it so that creditors are more willing to lend to small businesses and after that, they offer better terms such as higher loan amounts and longer period of repayments.
- Business Lines of Credit
This is another commercial business loan that is quite a bit more complex in the way of how it works but is really worth putting in the attempt to understand and take advantage of. A business line of credit works a lot like a non physical business credit card wherein if your business is qualified for a line of credit, it is going to be prolonged a credit limit that it may draw from on a monthly basis. Business line of credit can range from $10,000 to up to one million dollars and can be repaid from six months to five years not to mention that their interest rates can be as low as 7% but can sometimes go higher than 25%.
However, the best small business loans are the ones that are offered to businesses with bad credit. Working Capital has analyzed nearly 100 small business lenders and distilled down the list of the best lender options for those with this parituclar case.
Every business will need to be taken care of and a better way to take care of a business is to make sure that you got everything covered in the business.