If you’re an owner of a small-sized business looking for an investment loan to get your business off the ground there are many options you could take into consideration. A few of these options are SBA 7(a) term loans as well as non-secured working capital loans. You might also look at alternative financing options that can be used to help finance your small business.
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SBA 7(a) term loans
SBA 7(a) and term loans are available to small entrepreneurs who require working capital. These loans are flexible and are able to be used for many purposes. The money can be used to refinance debt, expand your business, or purchase assets.
The SBA guarantees a part of the loan to reduce the likely that lenders will default. However, a fee will be payable for the guarantee. This is typically 3.75 percent of the loan’s guarantee amount.
People interested in applying can get more information about the SBA 7(a) loan by looking through the SBA website. They also have access to the SBA Lender Match tool, which matches applicants with lenders approved by the SBA within two days.
As with most loans, rates of interest on 7(a) loans will vary depending on the amount and the repayment conditions. It can be fixed, variable or linked to the Prime Rate.
To be eligible for an SBA 7(a) loan you must complete an application and have it approved. A lender will then assess your financial situation and review your business plan. After approval, you will 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 can be an investment that is financially sound. It can be used to finance expansion, equipment, or to upgrade your building, among other things. The right type of loan will make your business grow.
It’s much easier than you think to obtain a working capital loan. Unlike a line of credit you can apply for the loan using a single application. You could even use 3 months of bank statements from your company to fund your loan.
Unsecured loans carry higher interest rates. This is because the lender takes a greater risk. In this regard the business owner should have a high credit score to be able to qualify. Additionally, you must have a plan for repaying the loan in a timely manner.
Unsecured working capital loans are an excellent option to fill a financial gap in your company. By taking a working capital loan allows you to take advantage of low rates on key products and upgrades to your facilities. A working capital loan will allow you to keep your business in business in difficult economic times.
Another benefit of having an unsecure working capital loan is the fact that you do not need to pledge any of your assets. Most lenders will require an online payment processor and deposit account.
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Smaller businesses have other financing options
Alternative finance models for small-sized companies are quickly becoming the preferred option for many entrepreneurs. These flexible financing options can provide the cash you need to fund expansion.
Alternative loans are also cheaper than traditional ones. Banks typically require huge down payments and you could require a few days before they can provide the cash you require.
Other alternatives to business loans include lines of credit invoice discounting, credit cards and cash advances for merchants. Each of these options gives you the opportunity to obtain money quickly and conveniently.
Business lines of credit are similar to credit cards, with the exception that they charge only interest on the money you take out. These are useful for spending on short-term expenses.
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Working capital loans can be beneficial for everyday expenses, such as paying employees or purchasing inventory. They’re not the ideal option for large-scale business changes.
Choose a lender with experience in business loans for alternative businesses. Also, take into consideration your credit score. Your chances of getting a favorable loan deal are increased if you have a better credit score.
Peer-to -peer lending is an alternative finance option for small-sized companies. Similar to crowdfunding, peer-to-business lenders offer small businesses loans from a variety of investors. This is especially beneficial for small-sized businesses that don’t have collateral.