If you’re an owner of a small-sized business looking for a working capital loan to get your business going there are many options you could consider. These include SBA 7(a) and term loans, and unsecured work capital loans. You may also consider looking into alternative financing models that could be used to finance your small-scale business.
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SBA 7(a) term loans
SBA 7(a) (term) loans are available to small business owners who require working capital. These loans are flexible and can be used for many purposes. You can use the money for refinancing debt, expanding your business, or even purchasing assets.
The SBA guarantees a part of the loan to reduce the likely that lenders default. The guarantee is accompanied by a fee. This is typically 3.75% of the loan’s guaranteed amount.
The interested parties can get an understanding of the SBA 7(a) loan by visiting the SBA website. They will also be able to access the SBA Lender Match Tool, which connects applicants with lenders who have approval within two days.
Like most loans, the rates of interest on 7(a) loans can vary in accordance with the amount borrowed and repayment conditions. It is either variable or fixed and linked to the prime rate.
You will need to complete an application in order to apply for an SBA 7(a), loan. The lender will then look over your financial history and assess your business plan. After the approval, you 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 can be a wise financial decision. It can be used to fund equipment, expansion, or to upgrade your building, among other things. The right type of loan will help your business thrive.
It’s a lot easier than you might imagine to get a capital loan. Contrary to a line-of-credit, you can get an advance with just a single application. You could even use 3 months of bank statements from your business to fund your loan.
Unsecured loans are more expensive in terms of interest rates. This is because the lender takes on more risk. So an owner of a business should have a high credit score to be eligible. Also, you should have a plan to repay the loan on time.
Unsecured working capital loans are an excellent way for your business to bridge short-term financial gaps. 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 can help you to keep your business in business even in tough economic times.
A working capital loan that is unsecured is another benefit because you don’t have to pledge any of your assets. Most lenders will require an online payment processor and deposit account.
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Small-scale businesses have additional financing options
Many entrepreneurs are turning to alternative financing models for small-sized businesses as the most preferred option. They provide flexible financing solutions that can help you get the cash you need to expand.
Alternative loans are also more affordable than traditional loans. Banks typically require huge down payments, and you may have to wait for a while before they are able to provide the money you need.
Other alternatives to business loans include lines of credit invoice discounting, credit cards and cash advances from merchants. These options can help you quickly receive funding.
Business lines of credit work exactly the same way as credit cards but charge interest only on money that you take out. These are useful for short-term expenses.
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Working capital loans are great for daily costs such as ordering inventory or paying employees. They are not the ideal option for large-scale business changes.
Choose a lender with experience in alternative business loans. Your credit score is also crucial. The greater your score, the greater your chances of getting the best financing deal.
Other alternative financing models for small businesses involve peer-to-peer lending. Similar to crowdfunding, these peer-to-business lenders offer small businesses loans from several investors. This option is especially beneficial for small-sized businesses that do not have access to collateral.