If you’re an owner of a small business seeking a working capital loan in order to help your business get going there are plenty of options you could take into consideration. One of them is SBA 7(a) term loans as well as working capital loans that are not secured. You might also look into alternative financing models that can be used to help finance your small-scale business.
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SBA 7(a) and term loans
SBA 7(a) or term loans are available to small-scale entrepreneurs who require working capital. These loans are flexible and can be used for many reasons. The funds can be used to repay loans, expand your business, or purchase assets.
The SBA guarantees a part of the loan to make it less likely that lenders default. The guarantee comes with a cost. The fee is usually 3.75 percent of the guarantee amount of the loan.
Anyone interested can gain an 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 with lenders that have been approved within two days.
Like most loans, the interest rate for a 7(a) loan will depend on the amount and the repayment terms. It can be variable, fixed or linked to the Prime Rate.
To be eligible for an SBA 7(a) loan, you will need to fill out an application form and be approved. The lender will review your financial information and analyze your business plan. Once you have been approved, you sign a loan contract to receive the loan funds.
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Unsecured working capital loans
No matter if you’re just beginning or expanding, an unsecured working capital loan could be an ideal financial decision. It can be used to buy equipment to expand your business or to improve your building. The right option will make your business grow.
Getting a working capital loan is much easier than you think. Unlike a line of credit you can apply for a loan by filling out a simple application. You can even pay for your loan using three months of business bank statements.
Unsecured loans carry higher interest rates. This is because the lender is taking on more risk. So the business owner should have a high credit score in order to be eligible. Additionally, you must have a plan to pay back the loan on time.
Unsecured working capital loans are an excellent way for your company 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 will allow you to keep your company afloat in difficult economic times.
Another great thing about an unsecured working capital loan is the fact that you do not need to pledge any of your assets. The lender will usually require the services of a payment processor and a deposit account.
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Alternative finance models for small businesses
Alternative financing models for small-sized companies are quickly becoming the preferred option for many entrepreneurs. They provide flexible financing solutions that will give you the funds you need to grow.
Alternative loans are also more affordable than traditional ones. Banks usually require large down-payments and you may have to wait a while before you can secure the funds you require.
Other alternatives to business loans include lines of credit invoice discounting, credit cards, and merchant cash advances. All of these options give you the chance to get money quickly and conveniently.
Business credit lines are similar to credit cards, but they charge only interest on the cash you take out. These options are especially useful for short-term expenditures.
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Working capital loans are a great option to cover the cost of daily expenses, such as ordering inventory or paying employees. They are not the best solution for large-scale transformations of businesses.
When selecting a lender for an alternative business loan, make sure you choose a business that has experience. Your credit score is important. The greater your score, the better your chances of receiving favorable financing deals.
Other alternative financing models for small businesses involve peer-to-peer lending. Peer-to-business lenders provide small businesses with loans from many investors, similar to crowdfunding. This option is especially useful for small businesses that don’t have collateral.