When you’re running a business, you need to make sure that you have enough cash flow to fund growth. You may want to purchase a big piece of equipment to expand capacity or hire a new salesperson.
Whatever your reason may be, a business loan makes sense. You’ll be able to make those investments and have a fixed monthly payment. Best of all, you’ll be able to grow your business faster.
Not all business loans are created equal, though. Read on to discover what the types of business loans are and how to get one to grow your business.
1. SBA Loans
An SBA loan is a business loan that you get from a bank that’s backed by the government. The bank’s risk is covered in case your business goes under or can’t pay the loan back, the federal government will step up and pay the loan on behalf of you and your business.
You can get an SBA loan for almost any amount. There are some loans that are small microloans. There are larger loans that can be used in case you want to purchase an office building.
2. Standard Bank Loans
Banks also offer loans that are not SBA loans. They’re not backed by the government, so there’s more risk to the bank to make a loan.
They’re going to do everything they can to make sure that they do their research to lend to companies that will pay the loan back. Otherwise, the bank will lose a ton of money.
These loans are very hard to get, with only about a quarter of these loans getting approved.
3. Peer-to-Peer Loans
Individual investors look for ways to help small businesses and make money at the same time. They’ll use a website called peer-to-peer platforms that connect these investors and business owners looking for a loan.
4. Friends and Family Loans
When all else fails, you can always turn to friends and family to fund your loan. This is an easy way to get a loan if your credit history isn’t that great.
The issue with these types of loans is that you’re dealing with money, friends, and family at the same time. Sometimes, these things don’t mix well. If you fail to pay them back, you can really damage those relationships.
How to Qualify for a Business Loan
How can you qualify for a business loan? Your business history and credit history will be major factors in getting your loan approved.
If you don’t have much of a business history, you better have a strong business plan. The loan approval comes down to your ability to prove that you can handle credit and can pay the loan back.
The Types of Business Loans
When you’re looking for capital to start or grow your business, a business loan can help you do things faster. The types of business loans available make it easy to get the right loan to fit your needs.
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