5 Types Of Small Business Loans
Finding the right kind of loan for your small business can be challenging. We’ve broken down five of the top loan types to help make the lending process clearer for your business needs.
Long Term Loans
If your business is looking to fund larger projects that pay back over a longer term this option may be right for you. If your business is looking to expand to a new location, have new products to develop, equipment to purchase, and large-scale inventory purchases a long term loan with terms of 15 to 60 months and interest rates as low as 5.49% is the best fit.
Short Term Loans
If your business is looking to finance a project that has an immediate return on investment such as updating or refreshing locations, inventory deals with a quick turnaround, marketing campaigns, seasonal hiring, or high demand inventory short term business loans with terms of 3 to 12 months is right for your business. Short term loans cost around 19% on average and ask for a fixed daily payment Monday through Friday until the loan is paid back. Short term loans are great when you need quick funding for a project and don’t mind paying higher interest rates because the return on investment is so high.
The start-up financing program connects entrepreneurs and small business owners with $25,000 to $150,000 in unsecured business lines of credit. This program can provide you with funding in as little as 10 days and is typically offered with 0% interest rate for the first 6-18 months. In the second year, the blended interest rate for the credit cards averages around 8% depending on the bowers’ credit score. This is a great way to get your business off the ground fast for higher risk industries and when traditional SBA loans are hard to obtain or take a long time to get an answer from the bank.
Line of Credit
For an established business looking to manage accounts receivable gaps, take advantage of new opportunities, or manage unexpected expenses these are great reasons why you would use a line of credit. How it works is you draw the cash you need directly into your business checking account at any time and you only pay interest on what you draw. Payback your balance early anytime and save on interest. Lines of credit can go as high as $100,000 with interest rates averaging around 13% and the line is paid back with fixed weekly payments.
Merchant Cash Advance
Merchant Cash Advances is an alternative business financing which is viable short term financing options if you don’t qualify for business loans but have the same funding needs as a short term loan. Merchant cash advances are based on credit & debit card sales which allows you to get funding fast. MCA’s terms are short in nature with a fixed percentage of your merchant service terminal sales paying back the advance every day your business is open. MCA’s are a great fit for businesses that have high transactions and predictable sales as your business can typically get a 10% advance on annual terminal sales.
Let Us Help
BitX Funding is an online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and we are passionate about helping your company reach its full potential.