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There are a variety of alternatives available to small-scale business owners looking for working capital loans to help them get their business off the start. These include SBA 7(a) as well as term loans and unsecured work capital loans. You might also look into alternative financing options that can be used to finance your small business.

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SBA 7(a) term loans
SBA 7(a) or term loans are available to small business owners who require working capital. These loans are flexible and can be used for numerous purposes. The funds can be used to refinance debt, expand your company or even purchase assets.

The SBA guarantees a portion of the loan to ensure that lenders are less likely to default. However, a fee will be due for the guarantee. The fee is usually 3.75 percent of the guaranteed amount of the loan.

Interested parties can get an understanding of the SBA 7(a) loan by looking through the SBA website. They also have access to the SBA Lender Match tool, which connects applicants with SBA-approved lenders within two days.

As with all loans the rate of interest on a 7(a) loan will be contingent on the amount and the terms of repayment. It could be variable, fixed or linked to the Prime Rate.

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You’ll have to fill out an application in order to apply for an SBA 7(a) loan. The lender will go over your financial history and review your business plan. After approval, you’ll sign a loan agreement and receive the loan funds.

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Unsecured working capital loans
Whether you are starting out or expanding, an unsecured working capital loan is a wise financial decision. It can be used to fund equipment, expansion or to improve your building among other things. The right choice will help your business grow.

The process of getting a working capital loan can be much simpler than you think. The loan can be secured with just one page, unlike the line credit. You can even pay for your loan with 3 months of bank statements for business.

Unsecured loans have higher interest rates. This is because the lender takes on more risk. As such, a business owner must have a strong credit score to be able to qualify. In addition, you should have a plan to pay back the loan on time.

Unsecured working capital loans can be a great solution to bridge a financial gap in your business. You can get low prices on essential products or upgrades to your facilities through a working capital loan. A working capital loan will help you to keep your business in business during tough economic times.

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Another benefit of an unsecure working capital loan is the fact that you do not have to pledge any of your assets. Typically, lenders will ask for the payment processor’s URL and an account for deposit.

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Smaller businesses have other financing options
Alternative financing models for small-sized businesses are fast becoming the preferred option for many entrepreneurs. These flexible financing options can provide you with the cash you require for growth.

Alternative loans are also more affordable than traditional loans. Banks typically require huge down payments and you may be waiting a long time before they are able to provide the money you require.

Some alternative business loan options include lines of credit, invoice discounting, credit cards and cash advances for merchants. Each of these options gives you the chance to get quick and easy funding.

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Business lines of credit work in the same way as credit cards, but they charge interest only for money that you withdraw. These options can be particularly beneficial for expenses that are short-term.

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Working capital loans are useful for daily costs such as ordering inventory or paying employees. They’re not the ideal option for large-scale business changes.

When selecting a lender for an alternative business loan, ensure you select a company that has expertise. Also, take into consideration your credit score. The better your score, the greater your chances of getting a favorable financing deal.

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Other alternative financing options for small businesses involve peer-to-peer lending. Similar to crowdfunding, peer-to-business lenders offer small businesses loans from multiple investors. This is particularly beneficial for small businesses that don’t have access to collateral.

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