At some point in any growing business, you’ll likely need a loan to cover building and operating costs, capital growth and unforeseen expenses. Fortunately, there are a number of resources for small business loans that can help keep your business on track. Here are five common loan resources for accessible and suited for small businesses to help you make the smart decisions.
Small Business Administration (SBA) Loans
The SBA exists to provide support for entrepreneurs and small enterprises who need financial assistance. As a part of that service, they also offer loan solutions at comparatively low rates. These competitive loans take some time to initialize and the approval process can be lengthy, but once in place, businesses can take advantage of substantial, low rate small business loans with limited credit history. However, they are also long-term loans, so it’s good to have a plan to stay in business for at least the duration of the loan.
Personal Line of Credit
Credit cards are another simple solution to cash flow problems. Opening a personal line of credit for your business can help with startup costs while keeping interest rates manageable. If you have good credit standing, then you can receive decent APRs that are much lower than business lines of credit.
For more traditional small business loans, you can take out a bank loan. Banks are often able to give some of the lowest interest rates available, given their access to regular cash flow. However, you do need to have a substantial credit history and sound finances. This can be difficult to achieve as a new business when costs and liabilities are high and profits are low.
Acquiring a personal loan is a viable, but risky option for some business owners who have the means. Whether they put up their own money or borrow from friends and family, you are entering into an agreement with little security. Should business go south, you or your investor will be left with an unrecoverable loss. Generally, personal investment should be limited to only what you can afford to lose.
Finally, some business owners use commercial lenders to secure small business loans. These companies tend to loan to borrowers with low credit standings or who are unable to receive traditional loans. The also offer fast capital. However, they often come with very high interest rates and short terms.
Securing the funds you need to start or run your business is not impossible. Start your search for affordable business lending today.