Various Types of Business Loans
The issues of finance is a problem that business around the globe face. Both startups and existing firms are in need of funding. A recession of losses that affect the company capital may be a reason why an established business requires additional finding. Expansion needs such as marketing, research and development, purchase of equipment and establishing new units or branches is a good reason for additional funding.Business loans features as the most used source of finance to fund these activities.
Business loan products offered by commercial banks and non-banking financial institutions are varied. Over the years, the financial industry has mutated greatly and now offers more options which are cheaper and flexible. Online lending has come to make the process of borrowing less tiresome and less humiliating.This article describes various types of business loans one may choose. It is advisable that one looks at the specific features of each product as offered by each lender so as to get the best.
SBA loans are long term state guaranteed loans given by SBA lenders. It is designed to help firms which are turned down by commercial banks to get funding.The package helps firms which have failed to secure a loan get one at low- interest rates. The range of the loan is often between $5000 and $1 million. Repayment period is between 5 to 25 years. The interest rates are above six but less than 13 percent. Before thirty days are over; the loan can be processed.
The conventional term commercial loan is given upfront with an agreement to pay for a set duration. The loan amount is above $25000 and less than $500,000. The repayment time is one to five years.The processing period is maximum two days and interest rates fall between seven to thirty percent.
For equipment financing, you get a loan to buy a cetin asset from a lender. The loan amount can go up to full funding of the equipment value. The expected service life of the equipment is used to determine the loan term. The interest rates are not less than eight percent and not more than thirty percent.
Just like the credit card, there is the business line of credit. There is an amount of money which you can withdraw up to a certain maximum. Interests are paid for the amounts used only. You can borrow as little as $10,000 and as much as $1 million.The loan term goes as short as six months and as lengthy as five years. Your requests can be processed within 48 hours.
Before you take a certain product, compare it with others so that you can make the best choice. There might be a difference between lenders regarding loan size, loan term, and interest rates.Checking terms between lenders is also a great idea.
Resource: Lessons Learned from Years with Loans