If you are a small business owner seeking a working capital loan to help your business get going there are plenty of options you could consider. These include SBA 7(a) or term loans and unsecured capital loans. Alternative financing models may also be available to finance your small business.
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SBA 7(a), term loans
SBA 7(a) and term loans are available to small business owners who require working capital. These loans are flexible and can be used for many reasons. The funds can be used to refinance debt, grow your business, or buying assets.
The SBA guarantees a portion of the loan to reduce the likely that lenders will default. However, a fee will be paid to guarantee the loan. The fee is typically 3.75% of the loan’s guarantee amount.
Anyone interested can gain more information about the SBA 7(a) loan by visiting the SBA website. They’ll also have access to the SBA Lender Match tool, which matches applicants with SBA-approved lenders in just two days.
Like all loans, the rates of interest on 7(a) loans will vary depending on the amount and the repayment terms. It can be variable or fixed or tied to the prime rate.
To apply for an SBA 7(a) loan, you will need to fill out an application and have it approved. The lender will review your financial history and review your business plan. After approval, you’ll sign a loan contract to receive the loan funds.
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Unsecured working capital loans
An unsecured working capital loan is a wise financial decision regardless of whether you are expanding or starting out. It can be used to purchase equipment or expand your business or to improve your building. The right one will help your business thrive.
It is much simpler than you might think to get a working capital loan. Unlike a line of credit it is possible to get a loan by filling out a simple application. You can even fund your loan with 3 months of business bank statements.
Unsecured loans carry higher rates of interest. This is due to the fact that the lender is taking on more risk. As such the business owner should have a high credit score to be able to qualify. In addition, you should have a plan to pay back the loan in a timely manner.
Unsecured working capital loans are an excellent method for your company to bridge short-term financial gaps. You can find low rates for key products or improvements to your facilities through a working capital loan. A working capital loan will allow you to stay in business even in difficult economic times.
An unsecured working capital loan has another advantage: it doesn’t require the pledge of any of your assets. Typically lenders will ask for an online payment processor and an account for deposit.
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Smaller businesses have other financing options
Alternative financing models for small businesses are fast becoming the preferred choice for many entrepreneurs. They provide flexible financing options that can help you get the cash you need to grow.
Alternative loans can also be more affordable than conventional ones. Banks usually require large down payments, and you may need to wait a while before they can provide the money you need.
Alternative business loan options include lines of credit invoice discounting, credit card, and merchant cash advances. These options can help you to quickly get funds.
Business lines of credit are similar to credit cards in that they charge interest only on cash you withdraw. These are particularly useful for short-term expenses.
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Working capital loans are great for everyday expenses like ordering inventory or paying employees. They are not the best solution for large-scale business transformations.
When selecting a lender for an alternative business loan, ensure you work with a company with prior experience. Also, think about your credit score. Your chances of getting a favorable finance deal are better if have a better credit score.
Other alternative finance models for small-sized businesses include peer-to-peer lending. Similar to crowdfunding, these peer-to-business lenders offer small businesses loans from multiple investors. This option is especially useful for small businesses that don’t have collateral.