Are you a small to medium sized business struggling to find excess capital to reinvest into your company? If so, a business loan might be the right solution for you. A business loan gives companies the opportunity to maintain effective cash flow to promote business growth and, in some cases, with no collateral necessary.
What is a Business Loan?
A business loan occurs when a lender gives money to a business with a set repayment schedule. The repayment schedule includes principal and interest payments. Lenders take into consideration business credit score, time in business, financial health, and the collateral you have to offer. A signed agreement will then take place and you will receive a repayment schedule. The most common form of repayment is in installments; however, a cash flow approach can also be used. With most business loans come some form of collateral needed and required ratios to be met. The lender wants to ensure that they are making a solid investment, frequently requiring businesses to secure the loan with fixed assets or inventory. However, unsecured loans are also an option for startup companies and companies with minimal assets through FundingJack.
What are the Different Types of Business Loans?
There are a few different types of loans to be aware of, including term loans, SBA loans, lines of credit, real estate loans and equipment financing. Term loans are the most common for small businesses and include loans through a financial institution. SBA loans are another popular option, often coming with more flexibility in payment terms, especially during hardships. A line of credit is another financing option, but instead of receiving the entire loan amount upfront, the business can continuously draw on the line and make payments when necessary. Real estate loans and equipment financing are loans backed by something of value, usually a building or large piece of equipment. Lenders will generally only lend up to the fair market value of these assets.
What are the Benefits of a Business Loan?
A business loan can allow businesses to implement effective cash flow management procedures, which ultimately leads to business growth. Small to medium sized businesses don’t always have the capital needed for necessary purchases and operating expenses. The cost of hiring an additional employee or replacing an outdated machine could wipe out the entire checking account balance. To maintain strong cash levels, businesses turn to finding a business loan to help bridge the gap. Although businesses will have to pay interest on these loans, the interest is tax deductible and business owners can rest assured that they have sufficient cash levels.
What if I Don’t Have Any Collateral?
Many small to medium sized business lack sufficient collateral to back a large loan through a financial institution. This is where third party lenders come into play. Some lenders, like FundingJack, offer small to medium sized businesses financing options without needing collateral. FundingJack has been an industry expert in unsecured financing, helping small to medium sized businesses secure needed funds. Reach out to FundingJack today to discuss your financing options.