Even if you do everything right in your business, it’s still possible for things to go wrong and for you to run into money problems. The problem is, a lack of money is one of the biggest reasons that businesses fail. The last thing you need is to have financing issues when things get rough.
If you’re trying to learn about your business loan options, this post will help. Below are three business loans that will give you the funding your business needs.
1. SBA Loan
Most people think of term loans when they think of business lending. They are the typical loans you see from a bank. You borrow a large sum of money and pay it back over time.
Unfortunately, not everyone can qualify for these loans. They require a strong business with great credit. If you’re a small business without much history, lenders may not want to give you money.
SBA loans are an alternative term loan that is more accessible for small businesses. The Small Business Administration partially backs these loans. This makes lenders more likely to approve you for a loan.
Most SBA loans will range from $5,000 to $5 million. You can use these loans for most business purposes. However, you need to have a plan and present it to your lenders if you want them to approve your loan.
2. Line of Credit
You don’t always know when an unexpected expense will come up. This makes it hard to apply for a regular loan. You’ll end up paying interest on money that you never end up using.
This is where a line of credit comes in. You can think of a line of credit as a credit card. Instead of receiving a lump sum of money, you only withdraw the money you need at the time.
Your line of credit will typically have a shorter repayment window than a traditional loan. Expect to have between six months and one year to pay back the money you borrow.
3. Invoice Loan
It can be hard to handle business when you’re sitting on a lot of unpaid invoices. Other companies don’t always pay their bills on time. This can cause you to fall behind yourself.
You can use your unpaid invoices as collateral to get a loan. A lender will finance you with an advance of between 60% – 90% of your total invoice.
The terms for these loans don’t always work the same way as other loan options. Your first option is to forward your invoice to your lender. They will collect for you and take their fee out of the payment.
Your other option is to pay a weekly amount until you pay off the whole balance. Once you pay your balance off, you’ll be charged a fee by the lender.
Consider All the Business Loan Options Out There
There isn’t a one-size-fits-all loan that will apply to every business situation. Make sure you consider all the business loan options available to you. Picking the right one for your needs will improve your chances of getting the loan you need.
You can start putting your cash to work once your finances are under control. Read our latest posts to learn everything you need to know to start bringing in new business.