If you are an owner of a small-sized business seeking a working capital loan in order to get your business off the ground there are plenty of alternatives you can think about. Some of these include SBA 7(a) term loans as well as working capital loans that are not secured. Alternative financing models may also be available to finance your small-sized business.
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SBA 7(a) term loans
SBA 7(a) or term loans are available to small business owners who require working capital. These are extremely flexible loans that can be used for a variety purposes. The funds can be used to refinance debt, expand your business, or buying assets.
The SBA guarantees a part of the loan to reduce the likely that lenders fail. However, a fee is payable for the guarantee. This fee is usually 3.75% of the loan’s guaranteed amount.
The SBA website provides a comprehensive explanation of the SBA 7 (a) loan. They also have access to the SBA Lender Match tool, which matches applicants to SBA-approved lenders within two days.
Like most loans, the interest rate on a 7(a) loan will be contingent on the amount and the repayment terms. It could be variable, fixed or tied to the Prime Rate.
You’ll need to fill out an application in order to apply for an SBA 7(a) loan. The lender will examine your financial information and analyze your business plan. Once you have been approved, you sign a loan contract to 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 or not you are expanding or starting out. It can be used to purchase equipment or expand your business or even to upgrade your facility. The right one will make your business thrive.
It’s a lot easier than you think to obtain a working capital loan. A loan can be obtained by filling out a single page unlike the line credit. You can even pay for your loan using 3 months of bank statements for business.
Unsecured loans come with higher interest rates. This is due to the fact that the lender takes a greater risk. In this regard the business owner must have a great credit score to be able to qualify. Additionally, you must have a plan to repay the loan in a timely manner.
Unsecured working capital loans are a great way for your company to bridge short-term financial gaps. You can find low rates on the most important products or upgrades to your facilities using a working capital loan. A working capital loan will allow you to keep your business afloat even in tough economic times.
Another advantage of an unsecured working capital loan is the fact that you don’t have to pledge any of your assets. The lenders will usually ask for an electronic payment processor as well as a deposit account.
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Smaller businesses have other financing options
Alternative financing models for small companies are quickly becoming the preferred choice for many entrepreneurs. These flexible financing options can help you get the cash you require for growth.
Alternative loans are also more affordable than traditional ones. Banks usually require large down payments and you may have to wait for a while before they can provide the money you need.
Lines of credit, merchant cash advances, invoice discounting, credit card and credit cards are all options for business loans. These options can allow you to quickly obtain funding.
Business lines of credit function exactly the same way as credit cards, but charge interest only on the money that you withdraw. These options can be particularly useful for short-term expenses.
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Working capital loans are useful for day-to-day costs for example, paying employees or ordering inventory. However, they are not an ideal solution for large-scale business transformations.
Make sure to choose a lender with experience in alternative business loans. Your credit score is also important. Your chances of getting a favorable finance deal are increased if you have a higher credit score.
Other alternative models for financing small-sized businesses include peer-to-peer lending. Peer-to business lenders provide small businesses loans through multiple investors, similar to crowdfunding. This is especially beneficial for small businesses who do not have collateral.