There are many types of business loans, and it’s important to choose the right one for your business. As these loans can assist you reaching your business goals, make sure that you have good understanding of this type of funding before applying. The loans detailed below, are the most common types of business loans existing in the market. There is additional information on our site, and you are more than welcome to get in touch with one of our financial advisors for more information.
Term loan – This type of loan is ideal for small businesses that have no business history. The lender will not require collateral if the business will remain solvent and profitable. An equity loan is also a good option for small businesses that just begun their activity and have no financial data. Usually, these loans are more expensive than term loans, but they can help you get your startup off the ground. Securing a term loan can offer you the starting capital you need for your business.
Short Term loan – These loans are a good way to fund a temporary business capital need. These types of loans have shorter repayment periods, carry an interest, and do require a business plan. In addition to a business plan, you may be required to provide some personal information for your short-term loan application. When applying for this loan online, make sure that you have all the required information, so that you will be approved and receive a quote in the shortest period possible.
Line of Credit – A line of credit loan is a great option for small businesses. This is a flexible type of financing that does not require using all the available amount of funds but rather just what you need at a time. Thus, you can access your line of credit and draw the required amount, to pay it back later with interest. Additional advantage of this funding is that it can be accessed repeatedly if you are not going over your credit limit. The amount of credit will depend on your qualification – credit score, annual revenue, and history.
Asset-Based Business Loans – asset-based financing is a form of business lending that relies on the collateral of your business, rather than just cashflow and credit. This type of financing allows for more mature businesses that are growing rapidly and need to maintain the liquidity needed to keep up with capital requirements. Although asset backed loan is great for high growth companies, it’s also great for companies that have stable growth or experience liquidity distress and need to recapitalize their balance sheet.
