Whether you’re establishing a startup company or you’re looking to expand your existing small business, you’ll need capital to invest in your future success.
This is where applying for one of the many different types of business loans can help. Tailoring your loan to your business ownership status and plan ensures that the loan terms and repayment schedule are a good fit for your company.
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But what different small business loans are available? Let’s take a look!
Term Loan
This common form of business financing allows you access to up to $1 million, often via online lenders for a faster turnaround. While term loans offer fast funding at higher amounts than many other small business loans, they often require some form of collateral, such as business equipment or real estate, to sell if you default.
SBA Loan
Guaranteed by the Small Business Association, SBA loans offer some of the lowest rates on the market. Repayment periods can also be as long as 25 years and you can borrow up to $5 million.
As you’d expect, such SBA loans can be difficult to qualify for and often involve a rigorous application process. That said, if you’re in a hurry and need a smaller cash injection, SBA Express Loans can be approved in under 36 hours and give you access to up to $350,000.
Startup Loan
Startup loans save entrepreneurs the hassle of approaching friends and family for the money they need to get their business idea off the ground. Although, while you don’t have to prove your business history to qualify for up to $750,000, a good credit score is a must, as is an impeccable tax record. If that could be an issue, learn more about IRS Fresh Start and how it could help you here.
Business Line of Credit
If flexibility is a priority and you’ve been in business more than a year, a business line of credit can get you up to $500,000 within a week or two. But, rather than receiving a lump sum, you’ll gain access to your credit limit to dip into whenever you want. Although you won’t need any collateral to guarantee this financial injection, you may have to pay extra fees and maintenance costs.
Equipment Financing Loan
Most small business loans allow you to spend your money as you see fit. Equipment loans, however, are specifically for business equipment, covering anything from balers and forklifts to accounting software and solar panels.
An advantage of this specificity is that you can often get access to the cash within 24 hours, while a business with strong finances can access competitive rates. That said, your equipment may become outdated before you’ve repaid the loan so you’ll need to be sure this is the best move for your business.
Your Guide to the Different Types of Business Loans
As this quick guide shows, there are many different types of business loans out there, and this isn’t even an exhaustive list!
With this in mind, every smart business owner knows that it pays to do your research and find a loan with the right terms and conditions for your business needs.
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