There’s nothing more American than coming up with an idea and starting a business around it. If you’re not one of the lucky few people with enough cash flow to get your business off the ground on your own, then you’re probably trying to drum up some ideas to get the cash you need. Many people have luck finding investors, but even with investors, you might need more capital.
That’s where small business loans come in. Like loans in general, there are many different types of business loans out there. Read on to learn about a handful of the best!
Business Line of Credit
The first option for cash-strapped business owners to consider is a business line of credit. Qualified applicants can receive anywhere from $1,000 to $500,000 within one or two weeks of the application. Interest rates vary up to about 24 percent APR, and the accounts typically mature within two years.
It functions similarly to a credit card because it is a revolving form of credit. Once you pay back a portion of the line of credit, you are able to access the money again. Many businesses use lines of credit to help purchase necessary equipment or hire new staff, but the choice of how to use it is up to the business owner.
Asset-Based Loan
What is an ABL loan?
Asset-based loans are exactly what they sound like: a loan that is secured by some form of collateral. Common forms of collateral include things like inventory, equipment, or accounts receivable. This collateral helps the lender protect themselves in the event that the borrower defaults on their loan.
They are great loans for business owners who already have their business up and running, but that doesn’t mean that new business owners can’t secure an ABL loan. If you don’t have any business collateral to secure the loan, then some companies may be willing to use personal property like real estate as collateral.
SBA Loan
The American government has an interest in helping small businesses succeed. Out of that interest came the Small Business Administration (SBA). This agency is in charge of helping small businesses prosper, including helping them find the cash they need to open their doors.
The SBA offers loans to small businesses that are paid back over long periods of time. Expect to be able to secure anywhere from $50,000 to $5,000,000. SBA loans are paid back over 10-25 years.
Unlike other types of business loans, SBA loans can be pretty cumbersome. The process can take several months, but the wait is worthwhile. The SBA backs a portion of the loan to reduce your overall liability to the lender in the event your business fails.
Will These Types of Business Loans Benefit You?
There are tons of different types of business loans available to help with starting or running a business. Be sure to look over all of your options before pulling the trigger. Once you secure your loan, all you’ll need to do is get your business up and running!
It’s no secret that running a business is difficult work. Every business owner encounters hiccups on their journey to success. Check out our blog for tons of great tips that’ll help make starting a business as easy as possible!
