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If you’re an owner of a small-sized business looking for an investment loan to help your business get going, there are many options you could think about. These include SBA 7(a), term loans and unsecured capital loans. Alternative financing models may also be available to help finance your small 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 think about applying for SBA 7(a) term loans. These loans are flexible and can be used for numerous purposes. The funds can be used to refinance loans, expand your business or purchase assets.

The SBA guarantees some of the loan which means lenders are less likely to default. However, a fee is due for the guarantee. The fee is usually 3.75 percent of the guarantee amount of the loan.

The interested parties can get a better understanding of the SBA 7(a) loan by visiting the SBA website. They’ll also have access to the SBA Lender Match tool, which matches applicants with lenders approved by the SBA within two days.

Similar to most loans, rates of interest on 7(a) loans will vary dependent on the amount and repayment conditions. It is either fixed or variable or linked to the Prime rate.

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You’ll need to fill out an application in order to apply for an SBA 7(a), loan. A lender will then assess your financial situation and review your business plan. After the approval, you will sign a loan agreement and receive the loan funds.

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Unsecured working capital loans
If you’re just starting out or expanding, an unsecured working capital loan can be an excellent financial choice. It can be used to purchase equipment to expand your business or to upgrade your building. The right type of loan will make your business thrive.

It’s much easier than you might think to obtain a working capital loan. The loan can be secured with just one page unlike the line credit. You can even use three months of bank statements from your company to finance your loan.

Unsecured loans carry higher interest rates. This is because the lender is taking on more risk. As such an owner of a business must have a good credit rating to qualify. Additionally, you must have a plan in place to repay the loan in a timely manner.

Unsecured working capital loans are an excellent option for your company to bridge short-term financial gaps. You can obtain low prices on the most important products or upgrades to your facilities through working capital loans. A working capital loan can allow you to keep your business running during difficult economic times.

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An unsecured working capital loan offers another advantage: you don’t have to pledge any assets. Typically lenders will ask for an online payment processor and an account for deposits.

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Alternative finance models for small companies
Many entrepreneurs are opting for alternative finance models for small-sized businesses as the most preferred option. These flexible financing options can give you the cash you need for growth.

Alternative loans are also cheaper than traditional ones. Banks usually require large down-payments and you may need to wait a few months before you can secure the money you need.

Some alternative business loan options include lines of credit invoice discounting, credit card, and cash advances for merchants. All of these options give you the opportunity to obtain funding quickly and easily.

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Business lines of credit are similar to credit cards, except they charge interest only on money you take out. These options are especially beneficial to cover short-term expenses.

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Working capital loans are useful for day-to-day costs for things like paying employees or ordering inventory. They are not the best solution for large-scale business transformations.

When selecting a lender for an alternative business loan, ensure you work with a company that has prior experience. Also, consider your credit score. The better your score, the higher your chances of securing an attractive financing deal.

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Other alternative models for financing small businesses are peer-to peer lending. Similar to crowdfunding, these peer-to-business lenders offer small businesses loans from several investors. This option is particularly beneficial for small businesses who don’t have collateral.

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