When it comes to getting a business loan, there are several types you can get. The best one for you is going to be the one that fits your situation and repayment schedule. Different business loans have different terms, some very short and some longer. If are new to business loans, you may think that are one size fits all. They are not. Credit Star Funding offers a full gamut of business loans for you to consider.
11 Types of Business Loans
The SBA offers an array of loans to small business owners. They actually dont issue the loan. They just back it. Here are a few of the most popular options:
- SBA 7(a) Loan: This loan is the most sought after and can be used for all kinds of purposes. If you’re seeking less than $25,000, the lender might not ask for collateral. When you start approaching the neighborhood of $350,000 or higher, plan on providing significant collateral to address the risk of default. In case you’re wondering, 7(a) loans can be awarded for as much as $5 million to those who meet all the qualifications.
- SBA 504 Loan: These loans are mainly used to fund projects, so they require more research and examination for approval. To even be considered, your business must have a net worth above $15 million and an average net income of $5 million or less. Qualifying projects include buying an existing building, building a new facility, buying land, and buying long-term machinery. The benefits to these loans include fixed interest rates, 90% financing, longer amortizations, and no balloon payments.
- SBA Express Loan: As the name implies, this type of small business loan is extra fast. As long as you meet the requirements, you can finance up to $350,000 with an SBA Express. Expect to have your application reviewed in 36 hours or less. Of course, this is still an SBA loan, so your funds will probably take a month to arrive.
Short term loan
Short term loans are like an SBA Express Loan but even faster. Click submit on your application and, if approved, you can have the money in as little as 24 hours. Because they’re built for speed, the amounts for these loans only go up to about $500,000. You’ll also need to pay that amount off quickly, generally within 1-3 years. The interest rates can be quite favorable, starting as low as 8%
Business term loan
A business term loan is a great way to acquire working capital, expand your business operations, purchase equipment, hire additional staff, or whatever else it is that you need. This type of loan product has been popular among entrepreneurs for decades. No, they’re not the flashiest loan on the block. But they’ve been a top-seller for decades and are known for their reliability. The loan amounts range from $5,000 all the way up to $2,000,000, and you can often see that money in your account in just a couple of days.
Plan on your business term loan repayment terms to be somewhere between 1-5 years. Better yet, the interest rates start as low as 6%. These loans have a fixed interest rate or flat fee, so the payments will never go up during the lifetime of the loan.
Merchant cash advance
With a merchant cash advance, you borrow against your future earnings to secure the financing you need. Once you’ve been approved and the funds are advanced to your account, you’ll begin repaying the loan by having an agreed upon percentage of your daily credit card deposits withheld for the lender. Your advance can be used for myriad purposes, so this type of financing has earned a reputation among entrepreneurs for being very flexible. Like short term loans, merchant cash advances are known for speedy delivery. You can apply for anywhere from $5,000 to $200,000, and time to funds can be as short as 24 hours. This type of convenience comes at a premium rate, and you can expect the interest rates to start around 18%.
Accounts receivable financing
If you’re like most businesses, you frequently deal with unpaid invoices. Experts estimate our nation’s businesses have a total of about $825 billion in unpaid invoices. Having people owe you money is part of business, but when those people never pay you, it can be a business killer. Accounts receivable financing (sometimes referred to as factoring) is tailor-made for the times you need money but have money held up by unpaid invoices. With this type of financing, you’ll receive the money you need by selling your purchase orders or receivables. The amounts vary, but you can often get up to 80% of your receivables. The money arrives in as little as 3 days, and the loan term can last up to a year. As for the factor rate, it’s as low as 5%.
Business credit card
Of all the types of small business financing out there, the business credit card is the most user-friendly. If you’ve had a personal credit card, you basically know how it works. You can access amounts up to $500,000 with a business credit card, with interest rates from 8-24%. It’s not unusual to get a 0% introductory rate. There’s very little paperwork required compared to many loans, and the time to funds rarely exceeds 2 weeks. This option is excellent for those who don’t feel ready to pursue a business loan or have been repeatedly turned down for them in the past.
Equipment financing
With amounts available up to $5,000,000, you can use them to purchase any kind of equipment your business might need. And that’s where the name is a little deceiving. When most people hear the word “equipment,” they think of things like backhoes, trucks, forklifts, tractors, cubicles, refrigerators, trailers, conveyor belts, and trash compactors.
This type of financing can also be used for less obvious equipment, such as payment processing programs, solar panels, or accounting software for your office. The point is, if the purchase will help to equip your business for its needs, it probably meets the criteria. One great thing about this type of small business loan is that you can access the money quickly. After submitting your application, you may see funds in as little as 24 hours.
Commercial mortgage
A commercial mortgage can be used for just about any property need, whether that’s retail space, an office, a warehouse, or a restaurant. If you’ve been around for decades and want to expand, that’s no problem. New to the business and want to purchase your first location? Perfect. You can use a commercial mortgage to get out of a lease and get into the stage of property ownership. You can leverage the financing to purchase a business location you’ve always wanted. If you’d prefer to build, you can use a commercial mortgage to pay for the construction costs. You can also use a commercial mortgage to refinance to extend your payment term or secure a better interest rate. This financing option is an asset-based loan, so the amount and rate of your commercial mortgage will be based on your credit and the value of the property you’ll be using as collateral.
Startup loan
The issue that entrepreneurs run into is that some types of small business loans require a substantial business history to qualify. If you’re just trying to get your business up and running from scratch, you lack time in business and revenue a lender may require. Some business owners get around this by seeking loans from their family and friends. This approach can be solid, but it’s fraught with challenges. And seeking investors outside of your inner circle can potentially require you to surrender too much equity. This stage is where a startup loan come really handy. This type of financing is meant for new businesses and can provide funds as low as $500 on up to $750,000. You’ll receive the money in a few weeks. The interest rate varies wildly based on the details of the loan, so you can expect anything from 0-17%. The loan terms can last as long as 25 years.
Business acquisition loan
A business acquisition loan is engineered for a specific purpose: buying an existing business or franchise. Because when great business opportunities arise, it’s not likely you’ll have a pile of money sitting around for the purchase. Instead, your objective will be to find the best financing option to make it happen.
With a business acquisition loan, you’ll get anywhere from $5,000 to $5,000,000. The terms can be revolving or for 10-25 years. The funds won’t arrive particularly fast, usually taking about a month to hit your account. One of the best aspects of these loans is that interest rates begin as low as 5.5%. These favorable rates mean you’ll save a substantial amount of money over the lifetime of the loan.
Getting a business acquisition loan can provide a jump start to your business, as buying a franchise or existing business is a great way to step right into a functional business without the backbreaking work of building it from the ground up. So instead of pouring your money into figuring out how to keep a fledgling business afloat, you can put your resources toward helping your business soar.
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Finding a Business Loan the Easy Way
For those businesses who are looking to get a loan, they are going to find that the process can be lengthy. There are many lenders that may not even consider this if the business hasn’t been established long enough. While other lenders may think that your credit score is not good enough. When this happens, many businesses think that they have no other option than to call it quits. However, that is not the case.
Talk to Credit Star Funding! They have a lender network that spans the globe, allowing them to find a lender that is going to work with you, regardless of what traditional lenders may think about you. They can often get business loans for clients that cover every expense that the person may have.
Credit Star Funding is going to give you an excellent offer, and one that you can count on to be low interest and best for your particular situation. They have helped hundreds in the past, and can help your business as well!
