Listed below are some of the various types of business loans available. Although there are precise procedures in how lenders and banks conduct their business, there is no standards as to how various types of business loans are structured. The minimum and maximum amounts can differ from lender to lender as well as the terms and conditions may vary. Just make sure you know exactly what conditions apply to each and every loan that you are considering.
Receive up to 5 Price Quotes for Business Loans & Equipment Leasing
Term loans are used for working capital, expansion, refinancing, and acquisitions they are probably the most common general loans available for a larger loan amount. These loans are paid back monthly over the lifespan expected for the assests that you are purchasing.
Short term loans are usually for smaller loan amounts that can be paid off almost always in a year or less. More than likely paid in one lump sum rather than the term loans that are paid monthly. These loans are usually best for small investments or seasonal inventory buildups that are with quick terms and usually less than $100,000.
Equipment financing is much easier to obtain than the loans themselves, because the equipment acts as direct collateral towards the loan you are requesting. With this purchased equipment you then don't have to worry about any liens going against you or your business, if payments aren't received then the equipment is taken rather than you or your company's credit being destroyed. So basically equipment financing can cover huge expenses into the millions of dollars depending on the size of your company.
Click here for Business Loan Definitions
Lines of credit are often set up to insure against cash flow problems and are more general business loans. Now these kinds of loans are a little different, you take out the money as you need it, the institution allows you to borrow a certain amount per year instead of getting a check for the full amount all at once. But with these types of loans if you don't pay on them quickly they become more expensive than any of the other types of loans listed. These are intended for temporary cash shortfalls so avoid using a line of credit for any significant business improvements.
Credit card advances, in lending, this shows your track record and also your expected future business. This can be a very good choice if your business has atleast three years on record of excepting credit cards. Why you might ask is this a good thing? Well with that many years on record with your company's credit card information shows an estimation of the company's future earnings and will enable you to recieve a good rate against your expected income.
Factoring or Receivable Financing is another small business option available out there. Basically with this type of loan you're selling your invoices to another company a third party. What this does for you is allows you to access the funds immediately instead of waiting for the clients to pay. But remember to subtract a small fee anywhere from 3% to 5% for the factoring company. But you'll still be getting an 80% value from the invoice right away and then the rest when the client pays. You might be a good candidate for factoring if your company is less than three years old, with good growth prospects but less than steller cash flow and if you have active accounts with slow paying customers.
Copyright © 2004-2009 , All rights reserved. QuoteCatcher® is a registered trademark. Use of this site constitutes acceptance of our Privacy Statement and Terms of Use