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Types of Business Loans

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There are various types of business loans that can be availed by numerous businesses, which ranges from conventional loans as well as business-credit-cards being offered by various traditional banks, commercial investment companies and credit unions, to profit-based finance being offered by alternative money lenders as well as various business finance companies.

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Conventional Bank Loans

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Conventional loans being offered by various traditional banks typically offer preset repayment terms for both long and short term funding. Short-term loan is frequently structured as a line-of-credit and ought to be repaid usually within 12 months. Long-term banking finance includes loans with repayment tenures which can extend for many years.

Business-Credit-Card

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Among the most frequent funding alternative available to smaller companies is a business-credit-card. These are basically personal-credit-cards bearing the particular business names, relying on the personal credit record of the owner for credit limits as well as approval. Based on a US Census data report, between 9.6 % and 17.6 % of businesses with 50 or lesser employees, utilize a credit card to fund their business operations or its extension.

SBA Loan Programs

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Formed in 1953, the SBA (Small Business Administration) was designated the task of improving the funding alternatives available to smaller industries. SBA loans are created by SBA-approved financers and partly are SBA guaranteed, which lessens financer’s risks when they offer funding to smaller companies. The borrower bargains detailed loan terms with the financer.

Smaller Business Alternatives

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It’s a well known fact that bigger traditional banks usually approve just 1 out of 6 smaller business funding applications. Luckily, many alternative finance options are available to smaller businesses. Therefore, alternative funding options have higher approval rates comparatively.

These alternatives Include:

Revenue-based funding: Offers an instant capital infusion in lieu of a preset portion of the future business income.

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Business-term-loans: Various alternative financers provide a factual business loan with a fixed date of repayment and preset weekly or daily repayments that are on the basis of an assessment of the business returns.

Merchant-Cash-Advance: Up-front cash funding is provided in lieu of a fixed percentage of the future credit or debit card sales transactions.

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