Whether you own a business or just starting a business, one of the things you have to be familiar with is the type of financing that is right for you. If chosen correctly leverage can truly optimize your business and move you closer to your goals. There are various business loans that you can choose from, but your ability to get these loans will depend on various factors.
It’s important to be prepared when it comes to getting financing for your business. Even if you are not in immediate need of finance, you can make sure you know what your options are in advance by researching the commercial loans that are available to you.
Remember, there are various factors that can affect the type of loan you qualify for. This includes your gross income, net income, consistency of revenue, length of time in business, the amount you need to borrow, your business forecasts, and your business credit history. Protect your credit history it is important.
The different loan options that may be available to you
There are different business loans and within these loans the terms and eligibility can vary for each one, so this is something that you need to be aware of.
Here are Eight (8) Business Loan options:
1. Line of Credit:
If you run a small business, this type of loan could be the ideal finance solution for your needs. It is ideal for dealing with cash flow problems and for short-term finance requirements. Lines of Credit or LOC can be secured by a physical asset or unsecured.
In short, this is a revolving line of credit that is arranged by your bank or lender so that you always have cash available to cover the operational costs of your business. Because these loans are not seen as high-risk, they usually represent an affordable option for smaller businesses.
2. Installment Loans:
With an installment loan, you make monthly repayments on the amount you borrow. The amount you repay each month combines your principal loan payment and interest.
Once you sign your contract, your funds are released and interest is then worked out from the date you receive funds to the date the loan is repaid in full. The repayment periods on these loans can vary based on your preferences and on the lender you go through. An SBA loan is an affordable installment loan.
3. Balloon Loans:
These loans are not always called balloon loans. They are often referred to balloon loans because the loan may be amortized for longer period of time but the loan is to be paid in a shorter period of time and there is still an outstanding principle when the loan is due. There are two options: a principle and interest payment option or an interest only option.
For example, you receive a $100,000 balloon loan with a 30 year amortization but with a balloon payment on year 3. With a principle and interest option, at year three you are still left with a loan balance of $94,000 and this amount is due. You may either pay it off with your own funds or refinance into another loan. With an interest only option, yes your payments would be slightly lower but you still owe the $100,000 you borrowed three year ago.
This is a great option if you plan on selling or liquidating a certain business asset and want to keep your monthly payments as low as possible.
4. Accounts Receivable Loan:
Another loan option that you may be able to consider is an accounts receivable loan. These loans are secured loans, secured against your receivables you have outstanding or 3 – 12 months historical receivables. Also called Merchant Cash Advance Loans. The lender will usually have a multiple of your last couple of months revenue set as a loan amount.
This is a great option for any business that has a good history of revenue.
5. Unsecured Loan:
Unsecured loans are generally associated with the company’s or the principles individual credit profile and the loan does not rely on any collateral. Loans are unsecured against any of your assets.
This is a great option if you do not have any assets.
6. Secured Loan:
Another option you can consider is a secured loan, which means that you do have to put up some form of collateral such as inventory, equipment, real estate, or intellectual property. These are asset based loans. Many people opt for this type of loan because it is easier to get than an unsecured loan, which is largely based on credit score and credit history. With secured asset based loans, the interest rates on these loans are also often lower and for longer periods of time.
Great option for those businesses that have assets.
7. Guaranteed Loans:
If you have someone that is willing to guarantee repayments on a loan, you may be able to opt for a guaranteed loan. A recourse loan, meaning the lender has recourse against the guarantor’s assets in case of loan default. You would need someone that is willing to act as a guarantor so that the lender has a fall-back in the event that you are unable to meet your repayment obligations. This could be someone such as your partner or even an investor in the business.
8. Business Credit Cards:
Business Loans from “AS IS” Loans
At AS IS loans, we offer flexible solutions for businesses. We offer all the business loans described above and a couple others for unique situations. Call us today at (800) 611-2747 to find out how we can easily provide you the capital you need. There are no denials. We will find a solution for your business whether you have been in business for years or you are just starting. We will provide you a free consultation, and develop a customized loan solution or funding plan, regardless of your credit score and history.