If you are an owner of a small business seeking a working capital loan in order to help your business get going there are plenty of alternatives you can think about. Some of these include SBA 7(a) term loans and working capital loans that are not secured. You could 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
If you are a small business owner who is in need of working capital, you should consider applying for SBA 7(a) term loans. They are extremely flexible loans that can be used for a variety of purposes. The funds can be used to refinance debt, grow your business, or buying assets.
The SBA guarantees a portion of the loan to make it less likely that lenders fail. However, a fee will be paid to guarantee the loan. This is usually 3.75 percent of the guarantee amount of the loan.
The interested parties can get 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 matches applicants to lenders with approval within two days.
Similar to most loans, rate of interest for 7(a) loans will differ dependent on the amount and repayment terms. It can be fixed, variable or linked to the Prime Rate.
You’ll need to submit an application in order to apply for an SBA 7(a), loan. A lender will then assess your financial standing and analyze your business plan. After approval, you will sign a loan agreement and receive the loan funds.
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Unsecured working capital loans
An unsecured working capital loan is a smart financial investment regardless of whether you are expanding or just starting out. It can be used to buy equipment, expand your business, or upgrade your building. The right one will make your business flourish.
It’s much easier than you might consider to obtain a capital loan. Contrary to a line-of-credit, you can get a loan by filling out a simple application. You could even use 3 months of bank statements from your business to finance your loan.
Unsecured loans are more expensive in terms of interest rates. This is because the lender takes on more risk. Therefore, a business owner must have a strong credit rating to qualify. Additionally, you must have a plan 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. Using 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 business afloat even in tough economic times.
A working capital loan that is unsecured offers another advantage: you don’t need to pledge any of your assets. Lenders will typically ask for an online payment processor and deposit account.
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Smaller businesses have other financing options
Alternative financing models for small-sized businesses are fast becoming the preferred option for many entrepreneurs. They provide flexible financing solutions that can give you the money you need to expand your business.
Alternative loans are also more affordable than traditional loans. Banks usually require large down payments and you may require a few days before they are able provide the cash you require.
Lines of credit, merchant cash advances as well as invoice discounting card, and credit cards are all options for business loans. These options can help you to quickly get funding.
Business lines of credit are similar to credit cards, with the exception that they charge interest only on cash you take out. These are particularly useful for expenses that are short-term.
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Working capital loans are helpful for day-to-day expenses like paying employees or purchasing inventory. However, they are not an ideal solution for large-scale business transformations.
When selecting a lender for an alternative business loan, make sure you work with a company that has expertise. Also, take into consideration your credit score. Your chances of getting a favorable loan deal are greater if you have a better credit score.
Other alternative financing models for small-sized businesses include peer-to-peer lending. Similar to crowdfunding, 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.