It’s no secret that business funding doesn’t come easily. Business loans involve a lot of risk for the lender, which results in stricter eligibility requirements. Even though it’s a challenge, it’s not impossible to get loan for new business endeavors.
It helps to understand the different types of loan options available. There is the small business line of credit, which usually has a cap on the amount of funds you can access, although it is useful for managing a company’s cash flow as well as unexpected expenses. There might be a fee for setting up this line of credit, but there usually isn’t a charge of interest until you actually withdraw money from the funds.
There is also the working capital loan, which is essentially a debt borrowing vehicle used by the business to finance its day-to-day operations. Some of these types of loans are unsecured, but newer companies that have little to no credit history will have to put up something for collateral.
If the primary reason you need to get loan for new business is for equipment, you might be interested in an equipment loan. Keep in mind that you will still likely e required to make a down payment – usually around 20% of the purchase price. The equipment itself is the security in this type of loan, so if you are unable to pay it all back, you’ll lose the equipment. The principal is typically amortized over 2- 4 year periods.
Get Loan for New Business For Specific Purposes
Small business term loans are those that are usually set for a dollar amount and are used for a variety of things, such as capital expenditures, business operations, expansion, etc. The interest must be paid monthly and the principal should be repaid anywhere from 6 months to three years. This type of loan can be unsecured or secured, and the interest can be fixed or varied. This is a good option for small businesses that need capital for either growth or onetime, large expenditures.
There are small business credit cards available if your credit score is good enough. Interest rates vary depending on your credit score, the lender, amount on the card, and so forth. Many of the insurers require that the principal owner be co-liable with the business. On some cards, there are cash back and rewards programs.
Additional options include:
• SBA-Backed loans
• Angel investors
• Crowd funding (peer-to-peer funding)
• Direct online lenders
• Accounts receivable funding
It’s wise to do research on all of your options on how to get loan for new business. The best place to start is with US Business Funding. This site will help you get approved with flexible payment and term options. US Business Funding has a lot of positive feedback and has been featured in Forbes, CNN Money, Inc 500, and other prestigious publications.