Business Loan Types For Small Business Owners

This guide covers the different business loan types all entrepreneurs should know about. Navigating the world of the mass business loan types can be confusing because there are so many business loan types of business financing options.

With personal finance, lending tends to be straightforward and mostly dependent on a borrower’s credit history or income.

Business loans require a lot more than a good credit score. They can also give entrepreneurs more flexibility if their business is starting. In the following paragraphs, we will discuss and explain some of the most common business business loan types your organization may want to try for a funding drive. This article will discuss the different business loan types for entrepreneurs.

Equipment Financing

Equipment financing is a popular type of financing used with a brand-new company. This type of loan is unique to the business world. Equipment financing is most commonly used in industries that require specialized equipment, such as restaurants, manufacturing, or transport companies. The loan structure allows the organization to finance new equipment purchases and pay manageable monthly payments. The loan is backed by the equipment, making it less risky for lenders.

Factoring For Business Owners

Another common way businesses secure funding is through a loan structure called factoring. This type of loan is also referred to as invoice funding. Companies with a consistent history of timely payments through their invoicing structures can use that potential cash flow to secure funding in a pinch.

Factoring are business loan types which enable business owners to get liquid cash sooner than waiting until they get paid from the customer.

Lenders will sometimes consider a business’ accounts receivable as an asset and turn this potential revenue into collateral for a loan. Factoring is sometimes used for businesses that get a sudden, large order and need a capital injection to increase production capabilities.

Merchant Cash Advance For Business Owners

A merchant cash advance is another way a company can secure fast funding. To qualify for a merchant cash advance, a business must have a solid history of daily customer credit or debit card payments.

Lenders that offer merchant cash advances look at your company’s daily credit and debit card sales and tie the loan terms to that amount. Once the loan application is processed and approved, the lender takes a portion of the credit and debit card daily revenue as repayment.

Business Line of Credit

Entrepreneurs can also take out a business line of credit to help raise capital for various expenses, such as payroll, new equipment, or expansion plans. Lending Network, LLC offers a quick loan approval process for a business line of credit.

Business owners should start developing business credit. The team at Lending Network, LLC can help guide business owners with developing business credit.

Instead of scrutinizing the company owner’s personal credit, the lender may put more value on how the business performs in its industry for this type of borrowing. If you have poor credit but a booming business, a business line of credit may be right for you.

Online Business Type Loans

There are also a variety of smaller online lending operations that offer quick cash injections to businesses. These online lenders usually have options for borrowers whom a traditional bank may have turned down. Online loan companies usually offer smaller funding, such as $10,000 to $100,000. Borrowers can also get instant approval since many of these lenders have online applications that are easy and fast to fill out.

Crowdfunding Business Loan Types

If you have a great idea for your business expansion or a concept for a new, revolutionary product, you may want to look into crowdfunding instead of a traditional loan. You’ll need to create a crowdfunding campaign page with a compelling write-up that details why you need funding. With crowdfunding, you can also set the terms.

Credit Card Business Loan Types

Business credit cards are also great options for growing companies with access to big purchasing power for supplies and inventory. Usually, an entrepreneur must have a strong credit score to qualify for a business credit card. The bank issuing the credit card may also need additional details about the size of the company, its revenue, tax identification numbers, and any debt owed by the business.

SBA Loans For Business Owners

There are business loan types that are government loans. The federal government also offers its own type of specialized funding through the Small Business Administration. An SBA loan may be the right option for a new, growing venture. Companies can take advantage of some of the different programs from the SBA for certain industries, economically disadvantaged areas, or minority-owned businesses. You may qualify for much lower rates and better terms with a loan backed by the SBA.

Personal Loans For Your Business

The last source of business loan types for small business owners is through the business owner’s own personal credit. It’s always possible to take out your own personal loan to cover costs for an expanding business.

To get approved for a personal loan, you must show a positive credit history and include a source of income from your business.

There are many possible lenders for personal loans, such as banks, online loan operators, or even family and friends. Learning about the various options for business owners who need fast funding is important. You may need to take out many different types of loans throughout the life of your company to help it reach its goals and grow.