There are a myriad of options for small-scale entrepreneurs looking for working capital loans to help them get their business off the starting point. These include SBA 7(a) as well as term loans and unsecured work capital loans. You might also look into alternative financing options that could be used to finance your small business.
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SBA 7(a), term loans
If you are a small business owner and are in need of working capital, you should consider applying for SBA 7(a) term loans. These are highly flexible loans that can be utilized for a variety of purposes. The money can be used to refinance loans, expand your business or even purchase assets.
The SBA guarantees a portion of the loan to reduce the likely that lenders default. However, a fee will be due for the guarantee. This fee is usually 3.75 percent of the loan’s guaranteed amount.
The SBA website provides a comprehensive explanation of the SBA 7 (a) loan. They’ll also have access to the SBA Lender Match tool, which connects applicants with SBA-approved lenders in just two days.
As with most loans, the rate of interest on a 7(a) loan will be contingent on the amount and repayment terms. It is either variable or fixed and can be pegged to the Prime rate.
You’ll need to submit an application form to be eligible for an SBA 7(a), loan. The lender will go over your financial information and analyze your business plan. After approval, you will sign a loan agreement and receive the loan funds.
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Unsecured working capital loans
An unsecured working capital loan is a smart financial investment, regardless of whether you are expanding or starting out. It can be used to purchase equipment or expand your business or even to upgrade your facility. The right option will make your business flourish.
The process of getting a working capital loan may be more straightforward than you think. A loan can be obtained on a single form, unlike a line credit. You can even pay for your loan by using 3 months of bank statements for business.
Unsecured loans come with higher interest rates. This is because the lender takes on more risk. In this regard the business owner should have a high credit score in order to be eligible. It is also essential to have a plan for repaying the loan in a timely manner.
Unsecured working capital loans can be an excellent method for your company to bridge short-term financial gaps. With a working capital loan you can avail of discounted prices on important products and upgrades to your facilities. Getting a working capital loan will enable you to keep your business running during tough economic times.
An unsecured working capital loan offers another advantage: it doesn’t require the pledge of any assets. Most lenders will require the services of a payment processor and a deposit account.
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Small businesses have other financing options
Alternative finance models for small businesses are fast becoming the preferred option for many entrepreneurs. These flexible financing options can help you get the cash you need for growth.
Alternative loans are also less expensive than traditional ones. Banks typically require large down-payments and you may need to wait a while before you can obtain the cash you require.
Lines of credit, merchant cash advances as well as invoice discounting card, and credit cards are all options for business loans. Each of these options gives you a way to obtain money quickly and conveniently.
Business credit lines are similar to credit cards, except they charge interest only on the money you take out. These options are especially useful for expenses that are short-term.
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Working capital loans can be beneficial for everyday expenses for example, paying employees or ordering inventory. They’re not the ideal solution for large-scale business transformations.
Be sure to choose a lender who has experience in alternative business loans. Also, consider your credit score. The greater your score, the greater your chances of getting a favorable financing deal.
Other alternative finance models for small businesses involve peer-to-peer lending. Similar to crowdfunding, peer-to-business lenders provide small businesses with loans from a variety of investors. This option is especially beneficial for small businesses that do not have collateral.