There are a lot of things that make starting a business difficult, but one of the hardest parts is getting the funding you need for your business. Not only do you need money to invest in growing your business, you also need to find a way to rent an office building or store, come up with inventory and pay employees if you have them. This may seem like a tall order, but business loans can help. If funding is stopping you from starting a business, we have all the info you need to know to get a business loan or funding.
When you’re considering a business loan, the first step is understanding what your choices are in terms of lenders. The type of lender you choose determines how hard it is to get approved, what kind of loans you have available to you and more.
SBA (Small Business Administration) loans are great if you’re looking for a government-guaranteed loan that’s easy to qualify for. Since the SBA guarantees that loans will be repaid to lenders, there isn’t as much risk for the lender. Plus, there are various types of SBA loans designed to fit different types of businesses. However, one thing to keep in mind is that SBA loans must be used for certain things and repaid in a certain amount of time.
Conventional bank loans are popular because you can get approved for one fairly quickly and there’s no government involved. The hardest part about opting for conventional bank lenders over other types is that it can be difficult to get approved for a conventional bank loan. As a matter of fact, these loans made up just 23 percent of funding requests in March 2016.
Alternative lenders and lending marketplaces are a popular option for businesses that otherwise wouldn’t be able to get approved for loans. These lenders are generally less stringent about requirements and will make a decision in a much shorter period of time.
Types of Loans
If you’re looking for quick business lending, you should know about the types of loans you have available to you.
SBA loan types include 7(a) loans, microloans, real estate and equipment loans and disaster loans. 7(a) loans are the most common type of loan and are generally used for purchasing things like machinery and equipment or buying, constructing or renovating a building. Microloans are for newer small businesses and are designed to provide a small amount of money for working capital or inventory purchases. A microloan can have a maximum term of 6 years. Real estate and equipment loans and disaster loans speak for themselves; both types of loans are designed for a very specific purpose.
When you get a loan from a conventional bank, you can get a working capital loan, equipment loan, merchant cash advance, line of credit, professional practice loan, franchise startup loan or invoice factoring loan. Working capital, line of credit and equipment loans are designed to provide working capital and equipment for small businesses, such as computers and printers. Merchant cash advance loans are based on your monthly credit card transaction volume. You can learn more about the types of loans and the benefits they offer with some quick research.
Whether you own a small business or you plan on starting one soon, it’s important to have a plan in terms of funding. Thankfully, there are a lot of quick business lending & funding options for you no matter what type of business you own. As long as you do your research before jumping into a business loan, you can get the funding you need without overpaying or dealing with predatory lenders.