There are a myriad of alternatives available to small-scale entrepreneurs looking for working capital loans to get their business off the ground. Some of these options include SBA 7(a) term loans and unsecured working capital loans. You may also consider looking into alternative financing models that can be used to finance your small business.
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SBA 7(a) and term loans
If you are a small-scale business owner who is in need of working capital, you should think about applying for SBA 7(a) term loans. These are loans that are extremely flexible that can be used for a variety reasons. The funds can be used to refinance debt, expand your company, or purchase assets.
The SBA guarantees a part of the loan to reduce the likely that lenders will default. However, a fee is payable for the guarantee. This fee is usually 3.75 percent of the guaranteed amount of the loan.
Anyone interested can gain more information about the SBA 7(a) loan by checking out the SBA website. They will also be able to access the SBA Lender Match Tool, which connects applicants to lenders with approval within two days.
As with most loans, the interest rate on a 7(a) loan will depend on the amount and the terms of repayment. It can be fixed, variable, or linked to the Prime Rate.
You will need to complete an application in order to apply for an SBA 7(a), loan. A lender will review your financial situation and review your business plan. Once you have been approved, you sign a loan agreement to 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 is a wise financial decision. It can be used to buy equipment to expand your business or even to upgrade your facility. The right choice will allow your business to grow.
It can be much easier than you imagine to get a capital loan. Unlike a line of credit you can obtain a loan by filling out a simple application. You can even use three months of bank statements from your business to fund your loan.
Unsecured loans carry higher interest rates. This is because the lender takes a greater risk. As such the business owner must have a strong credit rating to qualify. In addition, you should have a plan for repaying the loan on time.
Unsecured working capital loans can be an excellent way for your business to cover short-term financial gaps. You can obtain low prices for key products or improvements to your facilities using working capital loans. A working capital loan will help you to keep your company afloat during tough economic times.
Another great thing about an unsecured working capital loan is the fact that you do not have to pledge any of your assets. The lenders will usually ask for the services of a payment processor and a deposit account.
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Alternative financing models for small companies
Many entrepreneurs are turning to alternative finance models for small-sized enterprises as their top choice. These flexible financing options can give you the cash you need for growth.
Alternative loans can also be cheaper than conventional loans. Banks usually require large deposits, and you may have wait for a while before you can get the funds 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 a way to obtain quick and easy funding.
Business lines of credit work exactly the same way as credit cards, but they charge interest only on the money that you withdraw. These types of credit can be especially useful for short-term expenses.
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Working capital loans are useful to cover the cost of daily expenses, such as purchasing inventory or paying employees. They aren’t the best option for large-scale business changes.
Be sure to select a lender with experience in alternative business loans. Your credit score is crucial. The higher your score, the greater your chances of getting favorable financing deals.
Peer-to peer lending is another alternative finance option for small-sized companies. Peer-to business lenders provide small businesses loans from multiple investors, similar to crowdfunding. This is especially beneficial for small-sized businesses that do not have collateral.