If you are a small business owner looking for a working capital loan to get your business off the ground there are many alternatives you can look into. A few of these options are SBA 7(a) term loans and non-secured 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) term loans
SBA 7(a) and term loans are available to small business owners who require working capital. These are highly flexible loans that can be used for a variety purposes. The funds can be used to refinance debt, expand your business, or even purchasing assets.
The SBA guarantees a part of the loan to reduce the likely that lenders fail. However, a fee will be due for the guarantee. This is typically 3.75% of the loan’s guaranteed amount.
The SBA website offers a thorough explanation of the SBA 7 (a) loan. They will also be able to access the SBA Lender Match Tool, which connects applicants to lenders with approval within two days.
As with all loans, the interest rate for a 7(a) loan will be contingent on the amount and the repayment terms. It is either fixed or variable or tied to the Prime rate.
You will need to complete an application to apply for an SBA 7(a), loan. The lender will go over your financial history and assess your business plan. After approval, you will sign a loan contract to receive the loan funds.
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Unsecured working capital loans
An unsecure working capital loan is a wise financial choice regardless of whether or not you are expanding or just starting out. It can be used to buy equipment, expand your business, or upgrade your building. The right type of loan will make your business thrive.
Getting a working capital loan can be much easier than you think. Unlike a line of credit you can apply for a loan with a one-page application. You could even use 3 months of bank statements from your company to fund your loan.
Unsecured loans have higher rates of interest. This is because the lender is taking on more risk. Therefore the business owner must have a strong credit score to be eligible. You must also have a plan for repaying the loan in a timely manner.
Unsecured working capital loans are a great way to bridge a short-term financial gap in your company. By taking a working capital loan allows you to take advantage of discounted prices on important products and improvements to your facilities. Getting a working capital loan will enable you to keep your business running in tough economic times.
Another benefit of having an unsecure working capital loan is that you do not need to pledge any of your assets. Typically, lenders will ask for an online payment processor and an account for deposit.
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Small-scale businesses have other financing options
Many entrepreneurs are turning to alternative financing models for small enterprises as their top choice. These flexible financing options can provide you with the cash you need for expansion.
Alternative loans are also less expensive than traditional ones. Banks usually require large down payments and you may have to wait for a while before they are able to provide the funds you require.
Other alternatives to business loans include lines of credit, invoice discounting, credit cards and cash advances from merchants. Each of these options gives you the chance to get money quickly and conveniently.
Business lines of credit work similar to credit cards but charge only interest on the amount that you take out. These are useful for spending on short-term expenses.
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Working capital loans are great for everyday expenses like purchasing inventory or paying employees. However, they are not best suited for major business transformations.
When selecting a lender for an alternative business loan, make sure you select a company with expertise. Also, take into consideration your credit score. The greater your score, the higher your chances of securing a favorable financing deal.
Other alternative financing options for small businesses are peer-to peer lending. Peer-to-business lenders offer small businesses loans from several investors, similar to crowdfunding. This option is especially useful for small businesses that do not have access to collateral.