If you’re an owner of a small-sized business looking for a working capital loan in order to help your business get going there are many options that you may take into consideration. One of them is SBA 7(a) term loans as well as non-secured working capital loans. You could also look at alternative financing options that can be used to finance your small-scale business.
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SBA 7(a), term loans
If you are a small-scale business owner and are in need of working capital, you should consider applying for SBA 7(a) term loans. These loans are flexible and can be used for many reasons. You can use the funds to refinance debt, expand your company, or purchasing assets.
The SBA guarantees a part of the loan to make it less likely that lenders default. However, a fee will be paid for the guarantee. The fee is usually 3.75 percent of the guarantee amount of the loan.
The SBA website provides a detailed explanation of the SBA 7 (a) loan. They can also access the SBA Lender Match Tool, which connects applicants with approved lenders within two days.
Like most loans, the interest rates on 7(a) loans can vary depending on the amount and repayment terms. It can be variable, fixed, or linked to the Prime Rate.
To be eligible for an SBA 7(a) loan you must fill out an application form and be approved. The lender will go over your financial information and analyze your business plan. After approval, you’ll sign a loan agreement and receive the loan funds.
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Unsecured working capital loans
When you’re starting out or expanding, an unsecured working capital loan could be an excellent financial choice. It can be used to finance expansion, equipment, or to improve your building, among other things. The right type of loan will make your business grow.
The process of getting a working capital loan may be much easier than you think. As opposed to a credit line you can apply for an advance with just a single application. You can even fund your loan using 3 months of bank statements for business.
Unsecured loans have higher interest rates. This is because the lender takes a greater risk. In this regard an owner of a business must have a great credit score to be able to qualify. You must also have a plan for repaying the loan in a timely manner.
Unsecured working capital loans can be an excellent option for your company to bridge short-term financial gaps. Using a working capital loan you can avail of low rates on key products and upgrades to your facilities. A working capital loan will help you to keep your business afloat during tough economic times.
An unsecured working capital loan is another benefit because it doesn’t require the pledge of any assets. The lenders will usually ask for a payment processor and a deposit account.
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Alternative finance models for small businesses
Alternative finance models for small-sized businesses are fast becoming the preferred choice for many entrepreneurs. These flexible financing options can give you the cash you need to fund expansion.
Alternative loans are also less expensive than traditional loans. Banks typically require large down payments and you may have to wait a few months before getting the money you require.
Some alternative business loan options include lines of credit invoice discounting, credit cards, and cash advances for merchants. All of these options give you the possibility of obtaining money quickly and conveniently.
Business lines of credit are similar to credit cards, except they charge interest only on money you withdraw. These are helpful for short-term expenditures.
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Working capital loans are great for daily costs such as ordering inventory or paying employees. They’re not the ideal option for large-scale business changes.
Choose a lender who has experience in alternative business loans. Also, take into consideration your credit score. The greater your score, the greater your chances of getting favorable financing deals.
Peer-to-peer lending is another alternative finance option for small-sized businesses. Peer-to-business lenders offer loans to small businesses from several investors, similar to crowdfunding. This option is particularly beneficial for small-sized businesses that don’t have collateral.