There are many alternatives available to small-scale business owners seeking working capital loans to get their business off the start. One of them is SBA 7(a) term loans and working capital loans that are not secured. You may also consider looking into alternative financing options that could be used to help finance your small business.
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SBA 7(a) and term loans
If you are a small business owner and are in need of working capital, you should think about applying for SBA 7(a) term loans. These loans are flexible and can be used for numerous purposes. The money can be used to repay loans, expand your business, or purchase assets.
The SBA guarantees the loan in part which means lenders are less likely to default. The guarantee comes with a cost. The cost is usually 3.75 percent of the loan’s guaranteed amount.
Anyone interested can gain more information about the SBA 7(a) loan by checking out the SBA website. They can also access the SBA Lender Match Tool, which matches applicants with lenders that have been approved within two days.
As with most loans, the interest rate on a 7(a) loan will be contingent on the amount and repayment terms. It is either variable or fixed or pegged to the Prime rate.
To be eligible for an SBA 7(a) loan you must fill out an application and have it approved. A lender will then assess your financial history and assess your business plan. Once you have been approved, you sign a loan contract to receive the loan funds.
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Unsecured working capital loans
No matter if you’re just beginning or expanding, a non-secure working capital loan could be an ideal financial decision. It can be used to purchase equipment to expand your business or to upgrade your building. The right type of loan can help your business grow.
It’s much easier than you imagine to get a capital loan. Unlike a line of credit you can apply for an advance with just a single application. You can also use 3 months of bank statements from your company to fund your loan.
Unsecured loans have higher interest rates. This is because the lender takes on more risk. In this regard the business owner should have a high credit score to be eligible. Additionally, you must have a plan to repay the loan in a timely manner.
Unsecured working capital loans are a great way to bridge a short-term financial gap in your company. By taking a working capital loan you can take advantage of discounted prices on important products and improvements to your facilities. A working capital loan will allow you to keep your business running during difficult economic times.
An unsecured working capital loan offers another advantage: you don’t need to pledge any assets. The lenders will usually ask for an online payment processor and deposit account.
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Small-scale businesses have additional financing options
Alternative finance models for small-sized companies are quickly becoming the preferred option for many entrepreneurs. They offer flexible financing solutions that will give you the money you need to expand.
Alternative loans are also more affordable than traditional loans. Banks typically require large down payments and you might have to wait a while before you can obtain the money you require.
Alternative business loan options include lines of credit invoice discounting, credit card, and merchant cash advances. All of these options give you the opportunity to obtain quick and easy funding.
Business credit lines are similar to credit cards, with the exception that they charge interest only on the money you withdraw. These types of credit are particularly beneficial for short-term expenses.
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Working capital loans are great for everyday expenses like ordering inventory or paying employees. However, they are not an ideal solution for major business transformations.
If you are choosing a lender to get an alternative business loan, ensure you choose a business with expertise. Your credit score is also crucial. The greater your score, the better your chances of receiving the best financing deal.
Peer-to peer lending is another alternative finance option for small-sized businesses. Peer-to-business lenders provide loans to small businesses from several investors, similar to crowdfunding. This option is particularly beneficial for small businesses that don’t have collateral.