What is the types of business Loans
Business Loans are good to go with business owners. Business loans will help every business in a critical stage to clear any debts, payroll, or if need to buy machinery.
There are different types of loans offered by lenders, banks, and online financing companies.
Le see what are the types of business loans.
Best types of Business Loans
a) SBA Loan
- SBA 7(a) Loan
- SBA 504 Loan
- SBA Express Loan
b) Short term Loan
c) Long term Loan
d) Business Credit Card
e) Equipment Financing
f) Personal Loan
g) Invoice Financing
h) Invoice Factoring
i) Micro Loan
j) Merchant Cash Advance Loan
Small Business Administration loan offered by the government. The main purpose of the government is to help small business people to run their business.
SBA Loan offers more than $5,000,000. SBA gives time & tenure for more than 10 to 25 years to complete the loan amount.
Providing SBA loans is very slow compared to lenders or online financial companies. This is because if you apply for a loan amount in January it will be funded by next February or you may get it on march. It completely depends on SBA Loan providers.
Requirements to get SBA Loans
- Include Business Documents,
- Business taxes,
- Personal taxes,
- P/L Statement ( Profit & Loss)
Balance sheet required.
- SBA 7(a) Loan
Actually business loans in SBA 7(A) Liked by more people to use it in all kinds of options. If the buyer needs $25,000 then the lender will fund the amount without asking for collateral.
In case buyers need more than $350,000 you have to submit collateral for lenders.
Did you know that?
If you are qualify in all procedure and your document is eligible then you have a chance to get more than $5 million
b) SBA 504 Loan
This type of loan is used for fund projects. SBA 504 Loan is used for buying existing buildings, buying land, buying machinery and so on.
If you need to get this SBA 504 Loan amount, then you have some requirements.
Your Annual revenue more than $15 million above
Your net income average $5 million or even less,
If you have these qualities, then you can apply for SBA 504 Loan.
c) SBA Express Loan
In this type of loan, you can eligible up to $350,000. By applying this loan your application process is reviewed within 36 hours.
Short term Loan
If you need a loan amount urgently you can prefer a short term business loan. Compared to long term loans this loan is quite faster in progress.
By applying for a short term loan you have high chances to review your loan within 24 hours. If you are lucky you may get funds immediately or 2 to 8 hours.
Short term loans provide more than $200,000 for buyers and collect it on a regular or weekly basis. You need to pay an interest rate of approximately 8%.
If you need more funds, you need to submit collateral to approve it. Lenders even ask for collateral in the form of your vehicle, your home.
Long term Loan
Applying for a long term loan is opposite to a short term loan. In a short term loan you will pay the amount within 1 to 3 years.
But in Long term loan the term is completely different from short term loan. Yes, In Long term loan you need to pay up to 25 years.
Compared to other loans, long term loans are good and affordable for all business people to get more funds through banks and are able to pay a low monthly payment.
Business Credit Card
Business Credit card is one of the best ways to use it for your business. If you have business credit cards you can access amounts more than $500,000 with less interest rates.
The interest rate is much better, 8% to 24%. If you have more than 680 credit scores, you can apply for business credit cards.
Compared to applying for business loans you can go ahead with a business credit card, this will be more helpful to you to use it for your business.
By using business credit cards you can expand your office, Buying vehicles, or buying inventory.
Equipment financing is also a type of small business loan which helps you to buy equipment for your company.
You can get funds within 24 hours if you apply for a loan for equipment financing.
Did you know how to get business loans?
Uses of Equipment financing
Equipment financing is used for payment processing, getting accounting software of your company,
Personal Loan is provided by both online lenders and banks. If you have a good credit score then you can apply for a personal loan, it’s good to use. If you have a credit score more than 650 then you have high chances to get a personal loan.
From the start you are eligible to get up to $40,000. Interest rate is differ from your lenders and funds. Average interest for personal loan is up to 7% to 36%.
Let’s think about it, if your business has unpaid customer invoices, but you need to pay for them in 60 days.
Did you know what to do at this stage?
By using Invoice factoring you can get cash flow for unpaid invoices.
Invoice factoring is easy to get approval, no collateral needed for this.
Same features and concept from invoice factoring applicable in invoice financing also.
In invoice factoring you sell unpaid invoices. Yes
But here in invoice financing you need to use invoices as collateral to get funds in advance.
You will get quick cash within a limited period of time.
High rates compared to other options.
Micro loans are also a small business loan, and also this type of loan offered by lenders to provide for small business owners.
By applying for micro loans you will get approximately $50,000.
These loans are always applied by small business owners, startups, etc. Micro loans are always a benefit with startup companies in disadvantaged communities.
Merchant Cash Advance Loan
Rapid finance, CAN Capital are the best merchant cash advance options to use it. A lender initially funds the advance of your capital and purchase portion with credit & debit sales. You need to pay in advance with a percentage after.
Before applying merchant cash advances, you need to have at least 550 credit scores.
Your business age is above 3 months
Your monthly card sales minimum $5000.
As we discussed above, there are many types of loans available in the industry offered by banks, lenders, and online banks.
Did you notice that?
Each business loan has various reasons and also they are used for various purposes.
FAQ – Frequently Asked Question
Best type of personal loan provider for you?
What are the 5 types of government loans?
Agriculture loans, loan repayment, housing loan, education loan are the best loans provided by the company.
How types of business loan useful for business owners?
Every business depends on own unique way to run a business. If you need personal loan you can get it and use it for personal purpose. If you need term loan you can get it with lenders and banks.
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