There are different kinds of Business Loan Providers for small businesses. These loans can help you, whenever your business needs startup capital or is just in a tight situation. To avoid confusion here are some of the types of small business loans.
The collateral used on this loan is the equipment used in your business. Normally the terms and long and are paid monthly. In the case of default payment, the equipment financed will be seized by the lender. This way the personal assets of the owner is not affected.
Lines Of Credit
This is a short-term financing where a credit limit is imposed. Using this for capital investment is not recommended. It is more for the short term needs like depleted inventory or daily expense. The interest is charged based only on the what is used and not on the whole credit limit.
Credit Card Advance
A merchant account provider can give small business owners a loan by taking a cut on future credit card payments from customers. The owner will get immediate cash to fund whatever purpose it may serve the business. It will run until the whole payment plus interest is met.
Back in 1953, the government created the Small Business Administration to help small business owners in their financial needs. There are different SBA partners ready to help small business owners like microlending institutions, lenders, and community development organizations.
Secured and Unsecured Business Loans
The secured loan needs a collateral for it to be approved. The lender will have ownership of the collateral once the payment defaults. An unsecured loan relies on the credit history of the business owner. A good credit history will go a long way when requesting for an unsecured loan.
There is more type of business loans available for owners. Understand every agreement you sign to avoid complications in the future.