Finance ~ Loan Types

Need financing for your business? These are the most common types of Business Loans:

  • Business lines of credit let you spend up to a certain amount and then only pay interest on the amount you actually spend.

  • Equipment loans help you pay not just for heavy equipment but for any physical asset your business needs as part of its daily operations.

  • Invoice factoring loans (a.k.a. accounts receivable financing) pay you the amount of your outstanding invoices. No more waiting on clients who are slow to pay up—the lender pays you the invoice amount (minus a fee), and then they collect from your clients so you can get back to business as usual.

  • Merchant cash advances trade you a lump sum for a promised percentage of your future sales.

  • Peer-to-peer lending is a relatively new platform that lets you borrow a certain amount of money from a group of investors, usually in an online-only format.

  • SBA-backed loans are endorsed by the U.S. Small Business Administration, making them generally reliable and low-interest loans.

  • Term loans can get you a lump cash sum within 24 hours—with the trade-off of high interest rates.

  • Unsecured business loans are loans that don’t require collateral. Most business credit cards and lines of credit are unsecured loans.

  • Working capital loans give you the funds to pay for daily operations, pay employees, and deal with temporary drops in profit.

A note about term lengths: short-term loans give you money to spend with the expectation that you’ll pay back the full amount, usually within 18 months (though the term depends on the lender—some loans have a longer term limit, some shorter).

Long-term financing is better for long-term investment in your business; while short-term loans can tide you over during a seasonal dip in sales or help you purchase a crucial piece of equipment, long-term financing solutions offer a larger chunk of cash to grow your business and profits. ~

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#theBVDCenter #LoanTypes #SmallBusiness #Finance

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