Small Business Loans
The term “Small Business Loans” is actually a blanket label that encompasses many types of business financing that are tailored specifically for smaller businesses and “mom and pop” shops.
They typically come packaged in amounts ranging from $5,000 to $500,000, they have competitive interest rates, and reasonable repayment durations. The borrower’s credit history, his or her willingness to submit collateral, and their current or perceived company revenue can all play parts in eligibility, cost, and qualification.
Startup Loans
Many small business loans are designed to service startups. Startup loans are difficult to qualify for, and typically require an entrepreneur to present a complete business plan detailing everything from goals and company structure to target audience and marketing direction.
In addition to supplying a lender with a business plan, entrepreneurs who want a startup loan should be prepared to offer a substantial amount of collateral. Reason being, lending money to startups is one of the riskiest endeavors in the lending industry.
Startups, by definition, are unproved businesses that are looking to find their place in the capital world. When banks or non-conventional lenders give money for a startup, they’re essentially “investing” in somebody’s idea and work ethic. If that entrepreneur’s vision doesn’t pan out, then their lender could find themselves out of a lot of money.
To help curb that risk, many require collateral for startup financing, which often comes in the form of:
- Home equity
- Personal guarantees
- Company assets
- Business equity
Business Cash Advances
Business Cash Advances, also called Merchant Cash Advances, are smaller and quicker business loans, but they should not be likened to personal cash advances. These are not nearly as costly as a personal payday loan, despite their similar names.
These small commercial loans allow companies who need money quickly to get it. They’re perfect for businesses that need to:
- Pay employees
- Purchase new inventory
- Upgrade equipment
- Secure a lease
Merchant Cash Advance loans result in very fast cash, usually taking about 7 to 10 days before a qualified applicant sees money deposited into their account.
Additionally, many business cash advance lenders agree to be repaid based on your business’s credit card transactions, which means you repay the loan using only profit. So when business is slow and profits are low, the amount you repay to your lender will be low as well — and that’s ok!
When business speeds back up and you begin to make more sales, then your repayment amounts will increase accordingly.
This type of loan is great for those who want to mitigate risk while simultaneously acquiring a relatively small amount of money to make necessary purchases.
SBA Loans
The Small Business Administration (SBA) is a government branch that provides government-backed financing to businesses across the United States.
SBA loans are excellent, low-interest business financing opportunities that every small business owner in need of money should consider.
The one downside to the SBA’s commercial financing loans is that they’re prerequisites can be quite strict, thus disqualifying many small business owners from obtaining the financing they need.
SBA Disaster Loans
In addition to providing generic, everyday business financing, the SBA also steps up during times of emergency.
SBA disaster loans are extremely low interest, very long-term business loans that become available to businesses located in areas affected by disasters. Most of the time, the disasters that the SBA’s emergency commercial loans service are natural disasters, such as floods, tornadoes, storms, and droughts.
When disaster loans are approved for a particular area, the SBA makes an announcement declaring their availability and lists that area on their website.
SBA service centers are usually set up close to the affected locations, and interested applicants are required to visit those centers or call the SBA directly in order to apply.
USDA Business Loans
There’s another type of government-backed business financing, but it’s much more specialized and exclusive than the traditional loans offered by the SBA. This type is put on the by the United States Department of Agriculture (USDA), and is called USDA business loans.
USDA business loans are designed to service businesses and startups located in rural communities.
They can be used for:
- Working capital
- Purchasing machinery and equipment
- Buildings and property
- Refinancing certain types of existing debt