Did you know that over 627,000 new businesses open every year? If you are an entrepreneur in need of a loan in order to grow your business, then you might not be aware that you have a few different company loans you can choose from. We have put together this short guide to share some of the most popular small business loans you can apply for.
Keep reading to learn the most common loans for small businesses.
Table of Contents
1. SBA Loans
SBA or the Small Business Administration is a federal organization that offers a low-cost loan that is backed by the government. The SBA works with nonprofits and banks for business owners to reach out to in order to apply for the loan. These loans are best for working capital, refinancing business debt, expanding businesses, and businesses with a strong borrowing profile.
2. Equipment Loan
These loans are specifically for a business that has to purchase equipment. With an equipment loan, you can get immediate access to use the equipment you need without having to pay for the entire cost of the equipment up front. The business will just have to pay an interest fee for the loan.
3. Short-Term Business Loan
These loans carry short-term lengths which makes them less risky. Short-term business loans are a great option for borrowers with poor credit scores or for new businesses because they are low-risk. Usually, you will have to pay a one-time fixed fee for the loan instead of an interest rate.
This loan is best for businesses that need cash fast, have poor credit scores, or have an emergency come up.
This is a loan that is $50,000 or less. If your business has a lower capital requirement than other businesses then these are great because they are smaller loan amounts. If you only need a small amount of money and are a startup then this loan option might be best for you.
5. Merchant Cash Advance
With this loan type, a lender will give you a money advance in return for a certain percentage of future credit card sales. Usually, these payments are withdrawn from the business’s bank account by the lender on a daily basis.
This means that on the days that sales are low, the daily payment will be lower because the payment is based on the percentage of sales for that day.
6. Invoice Financing
If you are dealing with cash flow problems because of unpaid invoices, then you can sell your unpaid invoices to certain companies or use those invoices as collateral for a cash advance from a lender. This is a perfect loan for startups because it is reliant on your customers paying their invoices, not your business coming out of pocket.
Feeling Like a Company Loans Pro?
We hope that now that you have our list of the top company loans out there, you can make an informed decision and choose the best loan for your small business needs.
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