If you are a small-scale business owner looking for a working capital loan in order to get your business going there are plenty of alternatives you can consider. These include SBA 7(a) and term loans and unsecured capital loans. You may also consider looking into alternative financing models that could be used to finance your small business.
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SBA 7(a), term loans
If you are a small-scale company owner in need of working capital, you should consider applying for SBA 7(a) term loans. These loans are flexible and can be used for numerous reasons. The funds can be used to repay the company’s debt, grow it or purchase assets.
The SBA guarantees a portion of the loan to reduce the likely that lenders default. However, a fee is payable for the guarantee. This is usually 3.75 percent of the guarantee amount of the loan.
Interested parties can get a better understanding of the SBA 7(a) loan by visiting the SBA website. They will also be able access the SBA Lender Match Tool, which matches applicants to lenders with approval within two days.
Like most loans, the rate of interest for 7(a) loans will vary depending on the amount and the repayment terms. It could be variable, fixed or tied to the Prime Rate.
To apply for an SBA 7(a) loan you must fill out an application and get it approved. The lender will examine your financial history 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 an investment that is financially sound. It can be used to fund equipment, expansion or to upgrade your building among other things. The right type of loan will make your business flourish.
It’s much easier than you think to obtain a working capital loan. A loan can be obtained with just one page unlike a line credit. You can even fund your loan by using 3 months of bank statements for business.
Unsecured loans are characterized by higher interest rates. This is because the lender is taking on more risk. To qualify, a business owner must have good credit ratings. Additionally, you must have a plan to repay the loan in a timely manner.
Unsecured working capital loans can be a great way to bridge a short-term financial gap in your company. You can find low rates on the most important products or upgrades to your facilities using working capital loans. A working capital loan will enable you to stay in business even during difficult economic times.
Another great thing about an unsecured working capital loan is that you do not need to pledge any of your assets. Lenders will typically ask for a payment processor and a deposit account.
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Small-scale businesses have additional financing options
Many entrepreneurs are turning to alternative finance models for small enterprises as their top choice. These flexible financing options can give you the cash you need for growth.
Alternative loans are also more affordable than traditional ones. Banks typically require huge down payments, and you may have to wait for a while before they will be able to give you the money you require.
Alternative business loan options 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 function similar to credit cards, but they charge interest only on the money that you take out. These are particularly useful for expenses that are short-term.
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Working capital loans can be helpful for day-to-day expenses for things like paying employees or placing orders for inventory. However, they’re not the appropriate for large-scale business transformations.
Be sure to choose an institution with experience in alternative business loans. Your credit score is important. Your chances of getting a favorable finance deal are increased if you have a better credit score.
Peer-to peer lending is another alternative finance option for small-sized businesses. Similar to crowdfunding, these peer-to-business lenders provide small businesses with loans from several investors. This is particularly useful for small businesses that don’t have access to collateral.