As an entrepreneur, you probably have a ton of fantastic ideas for your future business. You’ve spent months researching your competition, learning about your target market, and establishing your brand.
However, a good idea only goes so far without financing. As such, you need to start looking into the different types of loans for small businesses.
How can you get the money you need to get your business off the ground? What if you want to buy a commercial property?
We are here to provide some possible solutions. Keep reading to learn about your options for small business loans.
SBA Loans
SBA loans are business loans granted through banks and other lenders. However, SBA loans are partially backed by The US Small Business Administration.
SBA backing provides more security to banks and other lenders who are willing to take a chance on prospective small businesses. However, in order to qualify for an SBA loan, you need to have exceptional credit, as well as an impressive business plan.
For more information, check out this page to find the most active SBA lenders in 2021.
Business Lines of Credit
One of the most common and practical types of loans for small businesses is a business line of credit. These can be either fixed or revolving.
Lines of credit grant the business owner access to a certain amount of money that can use at their discretion (rather than applying for a loan for a specific item or expense). A fixed line of credit gives you a fixed amount that you can spend one time. A revolving line of credit can be repaid and reborrowed, much like a credit card.
Term Loans
Term loans are good for business owners who need working capital or want to finance a specific investment. These loans can be attained online, through the bank, and through other investors. Term loans involve a specific amount, a repayment schedule, interest, and payoff date.
Generally speaking, your best bet is to get a term loan through a bank, which will provide the best interest rates and terms.
Commercial Real Estate Loans
Other common types of loans for businesses include commercial real estate loans. These are used for business owners looking to purchase a commercial property to set up their company.
These work very similarly to mortgages, though you can typically get approved for much more money through commercial real estate loans. However, your credit score will play a major factor in your eligibility.
Equipment Financing
Equipment financing is another common practice in small business ownership. These types of small business loans allow business owners to purchase the equipment they need for day-to-day operations if they can’t pay for it with cash or through their initial business loan.
Often, you can finance equipment through the manufacturer or company that sells it. This is a convenient option for small business owners that require machinery, vehicles, and other expensive equipment to get their company off the ground.
Different Types of Loans for Small Business and More Professional Advice
As you can see, there are plenty of avenues of opportunity if you’re looking to get financing for your business. And believe us, we’ve only brushed the surface of all the types of loans for small businesses.
If you want more professional advice, we have more content created just for you. Check out some of our other business, finance, marketing, and productivity articles before you go.
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