It’s no secret that business financing is not easy. Business loans carry a lot of risk for the lender, resulting in more stringent eligibility requirements. Although it is challenging, it is not impossible to obtain a loan for new business ventures.
It helps to understand the different types of loan options available. There’s the small business line of credit, which typically has a limit on the amount of funds you can access, though it’s useful for managing a business’ cash flow as well as unexpected expenses. There may be a fee for establishing this line of credit, but there is usually no interest charge until you actually withdraw money from the funds.
There is also the working capital loan, which is essentially a debt loan vehicle used by the business to finance its day-to-day operations. Some of these types of loans are unsecured, but newer businesses with little or no credit history will need to put up something as collateral.
If the main reason you need to get a new business loan is for equipment, you may be interested in an equipment loan. Keep in mind that you may still need to make a down payment, usually around 20% of the purchase price. The equipment itself is the security in this type of loan, so if you can’t pay it all off, you lose the equipment. The principal is normally amortized in periods of 2 to 4 years.
Get a loan for new businesses for specific purposes
Small business term loans are those that are generally set for a dollar amount and are used for a variety of things such as capital expenditures, business operations, expansion, etc. The interest must be paid monthly and the principal must be paid between 6 months and three years. This type of loan can be secured or unsecured, and the interest can be fixed or variable. This is a good option for small businesses that need capital for growth or large one-time expenses.
There are small business credit cards available if your credit score is good enough. Interest rates vary based on your credit score, lender, card amount, etc. Many of the insurers require the primary owner to be co-responsible with the business. On some cards, there are cash back and rewards programs.
Additional options include:
• SBA-backed loans
• Angel Investors
• Crowdfunding (financing between peers)
• Online Direct Lenders
• Financing of accounts receivable
It is wise to research all of your options for obtaining a new business loan. The best place to start is with US Business Funding. This site will help you get approved with flexible payment and term options. US Business Funding has many positive reviews and has been featured in Forbes, CNN Money, Inc 500 and other prestigious publications.