Companies that need funding for their growth must understand the types of business loans that can help. Since a wide range of loan options are available, business owners need to consider the potential advantages and disadvantages that come with each loan opportunity.
Short Term Loans: The short term business loans are one type available for those seeking company funding. A business cash advance falls under this category of loan because it is designed to repay in a short period of time.
The short term loans are useful when traditional lenders have turned down other loans, but they are best used as a last resort due to the fact that the loan has a higher than average interest rate.
Line of Credit: A business line of credit is a type of revolving loan that banks provide businesses. The line of credit usually requires at least two years since the company was established before it is possible to qualify for the funds, but each lender has different policies on their qualification requirements.
This type of business loan is similar to a credit card due to the revolving nature of the debt. When funds are repaid on the loan, the full limit is still available to make purchases as necessary for the business.
Start-up Loan: The start-up business loans are specifically used as seed capital for companies that are beginning. This type of loan is designed for new businesses that are not yet established and need funds to get started as a company.
Start-up loans require a clear business plan that will show how the company plans to use the funding and how much profit the business is likely to make within a five year period. In many cases, it might also require using personal property as collateral.
Business loans are variable based on the needs of the company. From start-up loans to lines of credit, it is possible to find something that will suit the business for improved growth and stability. Financing a company through a business loan is a process that requires nothing more than identifying the right loan and avoiding unnecessary applications.