If you are an owner of a small-sized business seeking an investment loan to get your business going there are plenty of options to consider. One of them is SBA 7(a) term loans and unsecure working capital loans. You might also look into alternative financing options that can be used to finance your small-scale 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 utilized for a variety of uses. You can use the money for refinancing debt, expanding your company, or purchasing assets.
The SBA guarantees a portion of the loan to reduce the likely that lenders fail. However, a fee will be payable to guarantee the loan. This is typically 3.75% of the loan’s guaranteed amount.
The SBA website provides a detailed explanation of the SBA 7 (a) loan. They will also be able access the SBA Lender Match Tool, which connects applicants with lenders that have been approved within two days.
As with all loans, the rate of interest on a 7(a) loan will be contingent on the amount and the repayment terms. It can be variable or fixed and tied to the Prime rate.
You will need to complete an application form to be eligible for an SBA 7(a) loan. The lender will review your financial information and analyze your business plan. After approval, you will sign a loan agreement to receive the loan funds.
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Unsecured working capital loans
If you’re just starting out or expanding, an unsecured working capital loan could be an investment that is financially sound. It can be used to pay for equipment, expansion, or to upgrade your building, among other things. The right option will help your business grow.
It can be much easier than you might think to obtain a working capital loan. The loan can be secured with just one page, unlike a line credit. You can even use 3 months of bank statements from your company to fund your loan.
Unsecured loans carry higher rates of interest. This is because the lender takes a greater risk. To be eligible, a company owner must have excellent credit ratings. Additionally, you must have a plan to repay the loan in a timely manner.
Unsecured working capital loans can be a great way for your business to cover short-term financial gaps. With a working capital loan allows you to take advantage of low rates on key products and upgrades to your facilities. A working capital loan can allow you to keep your company afloat even in tough economic times.
An unsecured working capital loan has another advantage: you don’t have to pledge any of your assets. Most lenders will require a payment processor and a deposit account.
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Small businesses have other financing options
Alternative finance models for small companies are quickly becoming the preferred option for many entrepreneurs. They provide flexible financing solutions that can give you the funds you need to grow.
Alternative loans are also more affordable than traditional loans. Banks typically require large down-payments and you may need to wait a few months before you can obtain the money you require.
Other alternatives to business loans include lines of credit invoice discounting, credit cards and merchant cash advances. All of these options give you the chance to get money quickly and conveniently.
Business lines of credit work similarly to credit cards, but they charge interest only on money that you take out. These are useful for short-term expenses.
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Working capital loans are great for everyday expenses such as purchasing inventory or paying employees. However, they’re not the appropriate for major business changes.
Be sure to choose an institution with experience in alternative business loans. Also, consider your credit score. The more impressive your score, more likely you are to receive the best financing deal.
Peer-to-peer lending is another alternative financing model for small companies. Peer-to-business lenders offer small businesses with loans from several investors, similar to crowdfunding. This is particularly beneficial for small businesses that don’t have access to collateral.
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