7 types of small business loans you can use to grow your business

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There’s nothing better than being your own boss. However, building a successful business can be quite difficult these days, especially if you don’t have the funds to take your business to where you want it to be and maintain its success.

One of the most common ways to grow and improve a business is to obtain loans from financial institutions or credit unions. That extra influx of cash you get from a loan can do wonders for a small business and can propel it to the top. However, when getting a loan, it’s important to get it right and get the type of loan that will only benefit you and your business and not harm it in any way. If you’re considering getting a loan, keep reading to learn more about the seven types of business loans you can get to grow your business and make it what you want it to be.

Commercial lines of credit

Commercial lines of credit are loans with a revolving credit limit. You can either use all of the amount you borrowed or part of it, depending on how much you need. Either way, you only pay interest on the loan amount you’ve used, and the amount you haven’t used is still available to you.

You can either get a secured or unsecured line of credit. A secured line of credit is a loan for which you will need to provide collateral. On the other hand, you will not need collateral for an unsecured line of credit; that is why it is the preferred option between the two. Here you can read how to get a business line of credithow it works, who it is for and where to apply.

Term loans

Term loans are traditional loans that you can get from any financial institution. With a term loan, you receive an agreed sum of money from the lender, which you must repay. Usually, term loans are repaid monthly with fixed payments that include a portion of the principal amount plus interest. You can use a term loan for all your business needs like operating costs, machinery, office space, etc. You can also decide whether you need a long-term or short-term loan.

Microcredits

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If you need a small amount of money, getting a microloan can be a step in the right direction for your business. With microloans, you can get a loan of up to $50,000 or less. However, you may need to offer collateral in return, such as a business asset, real estate, or personal property, depending on the lender you get your loan from.

SBA Loans

SBA or Small Business Administration loans are government guaranteed loans that have a small price compared to other types of loans. Since they’re backed by the government, they have lower interest rates and fees, which can be great if you don’t have enough funds to cover the higher monthly interest charges. However, these loans have a long approval process and you may have to wait up to three months to get approved and receive the funds. So if you don’t need the money right away and can afford a long wait, getting an SBA loan is the right choice for you.

Commercial real estate loans

Businesses usually obtain commercial real estate loans, i.e. commercial mortgages, when they need to purchase new real estate or finance existing real estate, such as office buildings, warehouses, etc. . Commercial real estate loans are similar to term loans and allow you to purchase new property, expand an existing property, or refinance an existing loan you have for a property your business already owns. Investing and buying real estate can be very lucrative, so following global real estate market trends can be very beneficial for you and your business investments.

Equipment loans

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Equipment loans can be very useful for you if you have a business that uses expensive machinery and equipment in its daily operations. You can use equipment loans to finance new or existing machinery, vehicles, equipment, etc., that you need to stay in business. However, it should be noted that these types of loans require collateral. In most cases, the equipment or machinery you buy is held as collateral that the lender can take away from you if you fail to repay your loan.

Invoice factoring and financing

One of the most common problems that small businesses face is receiving payments on time from customers or business partners. If you find yourself in a similar situation, it will be worth considering factoring or invoice financing. It allows you to sell unpaid bills to a lender and get part of the bill upfront. You can also use invoice financing to pledge unpaid invoices and get a percentage of the overall amount owed to you upfront. However, before deciding on the type of loan you want, you should first assess your business needs, calculate how much you can afford to pay per month for a loan, and research terms, fees and rates. interest from lenders in your area. to offer.

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