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While it would be ideal for small businesses to fund their expansion plans with their own money, most of them simply do not have that additional cash to invest into their growth. As such, they have to turn to external sources for funding, such as bank loans. This way, these small businesses get to keep full control of their company and still get the additional funding.
Before diving headfirst into applying for bank loans, it is important for small businesses to do their research on the different types of bank loans available and figure out which is the most applicable for them. A good first step would be to identify the purpose of that loan and the estimated exact amount required to pay it back, not forgetting the runway time you will need to be able to fully return the loan.
Small Business Administration (SBA) loans are great for smaller businesses that have difficulties finding the help they need. This federal agency helps small businesses by providing the resources and funding they need.
With the SBA loan, you can expect to receive sums ranging from $25,000 up to as much as $5,000,000. Since the SBA aren’t the actual lenders of the loan but rather a guarantor, lenders are usually more likely to approve the request. However, one downside to consider about SBA loans is that they are paperwork-intensive and usually take some time to be processed.
Some popular SBA loans that you may want to consider are:
What is special about this type of loan is that your funding is not given to you in a lump sum. Instead, the loan is revolving, which means that the borrower can choose to access the money only when they require it.
The biggest benefit of a business line of credit is the flexibility it provides borrowers, coupled with the fact that the money is usually made available to you within just 2 weeks. In addition, it is not difficult to qualify for a business line of credit.
If you happen to be urgently in need of money, then the short-term Loan might be suitable for you. When your application is processed and approved, you can expect to receive the sum in just under 24 hours at times. In addition, interest rates for short-term loans typically start as low as about 8% and are considered to be quite favorable.
However, due to the nature of the loan, borrowers are required to pay off the loans quickly, generally in a period of between 1-3 years. The short term loan is popular among entrepreneurs that suddenly face unprecedented crisis and circumstances.
Apart from those mentioned above, there are still a wide variety of other businesses loans offered by financing agencies like Money Avenue. With these loans, it becomes much easier for small businesses to expand and give them more flexibility to work on their business. Get started with us today.