If you’re an owner of a small business looking for a working capital loan in order to help your business get going there are plenty of options to take into consideration. These include SBA 7(a), term loans and unsecured capital loans. You may also consider looking into alternative financing options that could be used to help finance your small-scale business.
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SBA 7(a), term loans
If you are a small business owner and are in need of working capital, you should consider applying for SBA 7(a) term loans. These are loans that are extremely flexible that can be utilized for a variety of uses. The money can be used to refinance loans, expand your business or to purchase assets.
The SBA guarantees a portion of the loan to make it less likely that lenders default. However, a fee is payable for the guarantee. The fee is usually 3.75 percent of the guarantee amount of the loan.
Interested parties can get more information about the SBA 7(a) loan by checking out the SBA website. They’ll also have access to the SBA Lender Match tool, which connects applicants with SBA-approved lenders within two days.
As with most loans, interest rates for 7(a) loans will differ depending on the amount and the repayment terms. It can be fixed, variable, or tied to the Prime Rate.
To be eligible for an SBA 7(a) loan you must fill out an application and get it approved. The lender will look over your financial history and review your business plan. After approval, you’ll sign a loan contract and 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 or not you are expanding or starting out. It can be used to buy equipment to expand your business or to upgrade your building. The right type of loan will make your business grow.
It’s much easier than you think to get a working capital loan. The loan can be secured using just one page, unlike the line credit. You can even use three months of bank statements from your business to pay for your loan.
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 to be eligible. You must also have a plan to repay the loan on time.
Unsecured working capital loans can be an excellent method for your company to bridge short-term financial gaps. With a working capital loan allows you to take advantage of discounted prices on important products and upgrades to your facilities. A working capital loan will help you to keep your business afloat during difficult 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 the deposit account.
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Small-scale businesses have other financing options
Many entrepreneurs are turning to alternative financing models for small-sized businesses as the most preferred option. These flexible financing options can give you the cash you need to fund expansion.
Alternative loans can be cheaper than traditional ones. Banks usually require large down-payments and you might have to wait a while before you can get the money you need.
Some other alternatives for business loans include lines of credit invoice discounting, credit cards, and cash advances for merchants. All of these options offer you the chance to get funding quickly and easily.
Business lines of credit are similar to credit cards in that they charge only interest on the cash you take out. These options are especially beneficial for short-term expenses.
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Working capital loans are a great option to cover the cost of daily expenses, such as purchasing inventory or paying employees. However, they are not suitable for major business transformations.
When choosing a lender for an alternative business loan, make sure you choose a firm that has prior experience. Also, take into consideration your credit score. The greater your score, the greater your chances of getting a favorable financing deal.
Other alternative models for financing small businesses are peer-to peer lending. Similar to crowdfunding, these peer-to-business lenders offer small businesses loans from multiple investors. This is particularly beneficial for small businesses that do not have collateral.