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TIPS TO CHOOSE A SMALL BUSINESS LOAN

Posted on Thursday July 11th, 2019

Small business loans can be availed from banks and alternative lenders. Small business loans can be helpful for new research, startup, business growth, hiring new members in your company and enhancing sales and profit in your company. You can opt for a Quick Small Business Loan to get started on your venture. Various institutions offer unsecured business loans based on the profile and financials of the borrower. These loans can be cleared by equal monthly installments and have higher interest rates as compared to secured business loans.


TYPES OF SMALL BUSINESS LOANS
You can choose among the various options for Small Business Loan depending on your tenure of the loan, business needs and specific terms of the loan.


• SMALL BUSINESS LINE OF CREDIT- You can access funds from the lender whenever needed under a small business line of credit. There will be a maximum limit to the amount of fund accessible. A line of credit helps to maintain cash flow and unanticipated expenses. You have to pay an amount to set up the line of credit. The monthly interest is collected over a specific to amortize the principal drawn. The line of credit needs to be renewed annually with a new price.


• ACCOUNTS RECEIVABLE FINANCING- It is a credit facility that is fixed by the company’s accounts receivable. The account receivable’s helps you to draw cash quickly depending on the level of your accounts receivable. The interest rate under this scheme is variable. When the accounts receivable are cleared by your customer, then you account receivable line is paid down.


• WORKING CAPITAL LOANS- This loan scheme is a debt borrowing vehicle that helps the company to accumulate a fund for its daily operation. Any unanticipated variation in profit and sales can be managed at ease by this type of loan service. It is an unsecured form of business loan, so the company has to provide a personal guarantee. The tenure of this type of loan is 30 days to 1 year.


• SMALL BUSINESS TERM LOANS- It is a type of loan with a specific amount set beforehand for capital expenditure and business operations. The principal is amortized within six months to 3 years. The interest is paid monthly. It can be secured or unsecured. The interest amount may be fixed or variable.


• EQUIPMENT LOANS- A startup can buy any equipment by availing an equipment loan. You need to provide one-fifth of the price of the machine. This type of loan is secured through the purchased equipment. The principal is cleared typically in two to four years through monthly instalments. The interest can be accrued at fixed or variable rates.


• SMALL BUSINESS CREDIT CARDS- This type of credit card will assist any small business with the early financing for the company. It can be a tiring type of loan yet beneficial to cover up the expenses. The rate of interest depends on various factors like creditworthiness of the holder of credit card, the amount available on the credit card and credit card issuer. These credit cards offer initial offers like cashback offer and reward programs for your convenience.