If you have a company and you need to borrow money in the near future there are different types of loans which are appropriate for different circumstances. These loans fall into three basic categories. The first are fast loans which are easy to fund and generally expensive. Merchant account loans and cash advances will fall into this category. The second type is a line of credit which works very much like a personal credit card and that you have funds available to you but are not immediately dispersed those funds. Finally we have secured and unsecured long-term loans. These loans have repayment up to 40 years and typically have lower interest rates with higher acceptance requirements. We will be discussing these three types in further detail in today’s article.
Fast loans: this includes cash advances and merchant account loans as mentioned above. Cash advances for businesses are somewhat less expensive than personal cash advances in terms of interest rate they are still very expensive loans. You should only obtain a loan of this type in the event that you are in need of emergency funds. They do have the advantage however that they are easy to obtain and they typically only take a few days to get the money that you need. As business loans go these are fast easy and expensive. Merchant account loans are very much the same only instead of repay monthly payments you are paying based on your credit card transactions.
Business lines of credit: Lines of credit can range from only a few thousand dollars up too many tens of thousands of dollars depending on the size of your company and your finances. Typically these are used to pay for your day-to-day operations or for things that are unexpected but will be dealt with and repaid quickly. It is not a good idea to continue to add funds onto a line of credit without a clear plan to repay what you have already borrowed.
Traditional loans: traditional loans come in two varieties secured and unsecured. Secured loans are backed by some specific asset such as a piece of property and typically have the lowest interest rate of all loans. Unsecured loans from traditional lenders have longer repayment times then fast loans and lower interest rates but can be very difficult to obtain without well-established business history and credit.