Understanding Different Types of Small Business Loan Options

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Whether you are setting a new business or fueling your existing business you must apply for small business loans. There are a large number of traditional and alternative lenders that offer small business loan services that you can take advantage of. From expansion to research and development and enhancing your marketing and sales strategy, a small business loan is an instrumental way to bring a new life to your business. 

There is a range of business loan options available in the market that you must know before you apply for a loan. The options vary in nature and must be contemplated well depending upon the need of the business, loan tenure, as well as other terms of the loan. Some of the small business loan options available include:

Small Business Line of Credit:

A line of credit for small businesses means that you can avail of the fund from the lender as per the needs of the business. Line of credit loans has a cap set on the funds to be granted to a small business. This type of loan is considered the best when you need to manage the cash flow of the business or meet unexpected expenses. There is a fee associated with the loan but the interest is payable only when you avail the first instalment of the funds.

Accounts Receivable Financing:

This type of small business loans is secured by the company’s accounts receivable. Depending upon the accounts receivable, you can get the funds from the AR line of credit. The amount is paid off depending upon the accounts receivable paid by your customers.

Working Capital Loans:

This is a debt borrowing instrument that a company can use to finance the daily processes and operations. Companies apply for small business loan options when the revenues are low or there are circumstances that affect the business operations. While these types of loans are also offered on an unsecured basis, companies that have little or no credit history, they will have to put collateral for the loan. 

Small Business Term Loans:

There is a range of reasons why a business would apply for a small business term loan. The loan is availed on a fixed dollar amount to fuel the business operations, capital expenditures, or expansion. The tenure of the loan ranges from 6months to 3 years and the interest is payable on a monthly basis. These loans are available in both options, secured and unsecured and the interest rate is also fixed and variable. 

Equipment Loans:

Equipment loan offers businesses the ability to buy new instruments. The business however will have to pay a down payment equivalent to 20% of the purchase price of the equipment and the rest amount can be availed in the form of the loan.

Small Business Credit Cards:

One of the popular small business loan services, small business credit cards are frequently availed by businesses to fund their operations. The credit card is much like a personal credit card that you might have availed as an individual from a lender. 

Before you apply for small business loan, it is best to discuss your requirements with the best business loan broker Bundoora, the professionals at Williams Landing will ensure that you avail the best option and have lucrative funding for your business goals.

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