Not surprisingly, demand has given rise to a plethora of options when it comes to business loans; whether you’re looking to fund your next real estate acquisition or corral funds for the purchase of construction equipment for your construction company. In the following, we’ll take a look at a few of these loans – several of which can be used comprehensively for any aspect of your business.
Business Loans From the Government: SBA Loans
The SBA is the Small Business Administration, and it has the best loans around. However, the qualification requirements are steep, and the application process is extensive. The actual lenders are approved banks, and the federal government serves as your loan guarantor – they will repay a huge portion of the loan if you default. As such, the interest rates are as low as you can get anywhere.
Invoice Factoring and Financing
These two are similar in that they depend entirely on your accounts receivable; the primary benefit is that your credit history is largely irrelevant. What matters most is that you have enough clients to make using a factoring company profitable, as the administrative costs rise if you’ve got just a few accounts.
Term Business Loans
This type of business loan offers the highest amounts (the SBA is comparable); you will likely need collateral, however, if you can’t find a guarantor. This is traditionally considered the best type of loan if you’re looking to expand your current business. Funding is fast, but you do need to have a solid credit history.
Merchant Cash Advances Business Loans
This is one of the few types of unsecured financing available. If you’re just getting into business, however, this kind of business loan won’t work, as you need high credit card sales to meet the requirements. The money you pay to the merchant cash advance company comes from your daily credit receipts; this can lead to cash flow issues if your sales aren’t strong enough.
If you want more solid advice on business loans, check out the 18 Sierra Financial blogs; we’re experts in all areas of finance and business.