Small Business Loan Types (Part 2)

Small Business Loans

There are certainly a lot of ways to fund your small business through loans. Some are quick and have little in the way of requirements like a cash advance, while others take extensive paperwork and requirements. We will be discussing the various types of small business loan in today’s discussion.

Secured: This category is what most people think of when they think of small business loan. If a company needs money for a specific purpose, like the purchase of real estate, this is the loan type they’ll probably use. Somewhat difficult to obtain, and requiring a fairly stable and credit worthy business, they tend to have the lowest interest rates as they are provided by large banks and are backed by a specific asset.
Unsecured: These loans can come from a variety of sources, but what they have in common is that they are not backed by a specific asset. Instead, they are guaranteed by the credit worthiness and overall financial health of your company. Things like your revenue to expense ratio comes heavily into play when borrowing in this way.

Line of Credit: Again, these come from many places, and can scale from as little as a few thousand to almost a million dollars. You’ll see advertisements for $500,000 lines of credit, although these do exist you’re company would have to meet some very strict guidelines to obtain one. Unlike other loan types, you aren’t given money immediately, but are authorized to borrow against a set credit limit.

Cash Advance: These are very easy to obtain, and in terms of yearly interest are very expensive. Fortunately you would only be borrowing for a few months at a time, so the fees shouldn’t break the bank. Still it’s a good idea to get an advance for emergency purposes only. Typically all you’ll need is to demonstrate the last few months of revenue and you should be approved for up to one month’s worth of revenue. Repayment must typically occur within 90 days to avoid additional fees.

Merchant Account Loan: These work a bit different as well. Instead of having standard interest rate applied, a discount rate is applied at the time you borrow. So if the rate is 10% for example and you borrow $2,000 you would be given $1,800 but still owe $2,000. Repayment is structured as part of each credit card transaction a little bit at a time as opposed to around monthly payments.

For more information, go to Small Business Loan at http://www.unsecuredbizloan.com

Small Business Loan Types (Part 2) was last modified: November 8th, 2011 by Amit Kraidman
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One Response to Small Business Loan Types (Part 2)

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