If you are an owner of a small-sized business seeking an investment loan to help your business get going there are plenty of alternatives you can look into. Some of these options include SBA 7(a) term loans as well as unsecured working capital loans. You may also want to look at alternative financing options that could be used to finance your small business.
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SBA 7(a) and term loans
If you are a small 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 a variety of reasons. The funds can be used to repay loans, expand your business or to purchase assets.
The SBA guarantees a portion of the loan which means lenders are less likely to default. The guarantee is accompanied by a fee. This fee is usually 3.75 percent of the loan’s guarantee amount.
Interested parties can get more information about the SBA 7(a) loan by looking through the SBA website. They’ll also be able to access to the SBA Lender Match tool, which connects applicants to SBA-approved lenders within two days.
As with all loans the interest rate for a 7(a) loan will depend on the amount and the terms of repayment. It could be fixed, variable, or tied to the Prime Rate.
You will need to complete an application in order to apply for an SBA 7(a) loan. The lender will examine your financial history and assess your business plan. After approval, you will sign a loan contract and receive the loan funds.
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Unsecured working capital loans
Whether you are starting out or expanding, a non-secure working capital loan is a wise financial decision. It can be used to purchase equipment to expand your business or to improve your building. The right choice will help your business flourish.
Getting a working capital loan can be much simpler than you think. As opposed to a credit line it is possible to get a loan by filling out a simple application. You can even fund your loan using three months of business bank statements.
Unsecured loans have higher rates of interest. This is because the lender is taking on more risk. Therefore, a business owner must have a good credit score in order to be eligible. You should also have a plan for repaying the loan in a timely manner.
Unsecured working capital loans are a great option to bridge a financial gap in your company. Using a working capital loan you can take advantage of lower prices on essential products and improvements to your facilities. Getting a working capital loan will enable you to remain in business during tough economic times.
Another advantage of an unsecure working capital loan is the fact that you do not need to pledge any of your assets. Typically lenders will ask for an online payment processor and an account for deposits.
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Alternative financing models for small businesses
Many entrepreneurs are turning to alternative finance models for small-sized businesses as their preferred option. These flexible financing options can give you the cash you need for growth.
Alternative loans are also less expensive than traditional loans. Banks typically require huge down payments and you may have to wait for a while before they will be able to give you the cash you require.
Other alternatives to business loans include lines of credit, invoice discounting, credit card, and merchant cash advances. All of these options give you the opportunity to obtain money quickly and conveniently.
Business lines of credit work exactly the same way as credit cards, but they charge interest only on the money that you take out. These are useful for spending on short-term expenses.
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Working capital loans are useful for daily costs such as purchasing inventory or paying employees. They are not the best option for large-scale business changes.
Be sure to choose a lender who has expertise in alternative business loans. Your credit score is also crucial. Your chances of getting a favorable loan deal are higher if you have a higher credit score.
Peer-to-peer lending is another alternative method of financing for small businesses. Similar to crowdfunding, peer-to business lenders provide small businesses with loans from several investors. This option is especially useful for small-sized businesses that do not have collateral.