What is a
Small Business Loan?
So, what is a small business loan? Simply put, a small business loan is any funding option specifically designed for a small business. Small business loans allow existing or startup companies to borrow money from various lenders. Various loan types exist to help entrepreneurs meet different goals. The way each loan works depends on the type of loan.
There are many business loans on the market and it can be beneficial to go over just a few of them:
There are many business loans on the market and it can be beneficial to go over just a few of them:
1. Term Loan
A standard bank-type loan. You receive the funding and pay off the principle plus interest over time.
2. Principle plus interest over time. Equipment Financing
An excellent way for a growing business to get an edge. You receive the equipment upfront and pay it off over the life of the equipment.
3. Accounts Receivable Financing
If you have large amounts of outstanding invoices, you can borrow against them. The invoices act as collateral and AR Financing offers lower rates.
4. Merchant Cash Advance
A merchant cash advance is borrowed against future credit card sales. A borrower then pays back a percentage of daily CC sales to the lender. So, you never have to see the payments!
5. Merchant Cash Advance
A business line of credit works just like a non-physical credit card. The owner of a small business is extended a line of credit and is charged the interest only or what is spent.
