If you are running a business or planning to expand it, you will surely need a certain amount of money to finance your business, so how do I get a small business loan? Your startup’s regular or annual fund becomes the cause of the growth. Many startup owners get a small business loan and consider that it will increase the capital of their business without losing the equity and stake in their company.
The unique side of small business is it enables the entrepreneur to come out of the box and see the business world from different angles. Couldn’t you understand? Let me elucidate.
Suppose you are running a business or looking to start or expand it. You will need a good amount of money so that you can enjoy the charm and benefits of your marketing. Similarly, if you want to switch from 9 to 5 jobs in your business, then small business loans help you a lot.
Now, the question is, how many types of small business loans are there? So, without wasting a single minute, let’s explore its kind and how you can get a small business loan.
Inceptions and Nature of Small Business loans
There are generally nine types of small business loans, such as:
- Term loans
- SBA loans
- Business lines for credits
- Equipment loans
- Invoice factoring or invoice financing
- Commercial real estate loans
- Merchant cash advance
- Franchise loans
These loans have some terms and conditions, and their source is different. So, let’s begin the show on the road:
Term loans are the most ordinary type of small business loans, and it has a fixed rate of payment that you must pay in a specified time. The monthly payment for term loans is moored, and you must repay it with its fixed amount of interest principles. It depends on how you want to use the loans, such as daily expenses or equipment for your trade.
SBA stands for small business administrations. The SBA loan is a low-cost government loan, and most small business owners prefer to have it. However, a small business administration loan is renowned, and it takes three months for the application process to receive the funds. There are divisions of small business owners who prefer to borrow the SBA loans for their small business loans.
This type of small business loan resembled credit cards. The credit lines allow their borrowers to get the credit limit by checking the account you generally get access to.
The best flip side of the business lines for credit is maximizing your credit limits, repaying them, and withdrawing more money.
Do you want to finance your large equipment purchases but have a shortage of capital? Don’t worry, and we have a solution for it. The equipment loan is here to complete your dream. The equipment loan is the best option for heavy machinery, vehicles, or such pieces of equipment that preserves value, For example, computers or furniture. This type of small business loan helps many business owners.
Invoice Factoring or Invoice Financing
Many business owners want to receive on-time payments, and they prefer to adopt the method of invoice factoring. It is also known as accounts receivable financing. The main advantage of invoice factoring is that you can exchange the unpaid invoices with a lender and get a percentage of the invoice value.
Commercial Real Estate Loans
This is another type of small business loan known as a commercial mortgage. It helps to capitalize on your new or old properties such as offices, houses, warehouses, etc. These Loans act like term loans that allow you to buy or purchase new buildings for financing.
Microloans or small loans allow you to borrow $50,000 or maybe less in funding. A low amount of money is a good option for a small business loan, especially for those who don’t want a tremendous amount of money. This is the type of small business loan often offered by many nonprofit sources like governments or SBA.
Merchant Cash Advance
The merchant cash advance is the most high-cost loan as a small business loan. In this type of loan, you must pay a fixed amount of money within a week or from your daily earnings. Getting merchant cash advance loans is speedy, but it can be risky due to its high-interest rate.
It is easy to become a franchisee because it helps you achieve your goals and gives your business ownership faster and easier. It is entirely different from the process of starting from the ground up and where you need capital for the growth of your business. Franchise loans provide you with enough money to pay the upfront fee for franchise opening, and you can efficiently run your business.
It is not easy to initiate your business, especially when you have a low budget or capital. The options that are mentioned above are the best source of small business loans. We know that it would take time to establish, and at some point, you feel exhausted or disappointed because of the high rates of interest and leases. But after some time, you will be able to run your business in good manners and with significant capital.
BitX Funding is a marketplace for small business loans where they connect the right client with the right loan and right lender. Call now 203-763-1430 to learn how BitX Funding can help your company grow.