If you are an owner of a small-sized business looking for a working capital loan to help your business get going there are plenty of options to consider. A few of these options are SBA 7(a) term loans as well as non-secured working capital loans. Alternative financing models could be available to finance your small business.
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SBA 7(a) and term loans
SBA 7(a) and term loans are available to small business owners who require working capital. These loans are flexible and are able to be used for many purposes. The funds can be used to refinance debt, expand your company or even purchase assets.
The SBA guarantees a portion of the loan which means lenders are less likely to default. The guarantee comes with a fee. This fee is typically 3.75 percent of the guarantee amount of the loan.
Anyone interested can gain more information about the SBA 7(a) loan by visiting the SBA website. They also have access to the SBA Lender Match tool, which connects applicants to SBA-approved lenders within two days.
Like all loans, the rates of interest on 7(a) loans will vary according to the amount and the repayment terms. It is either fixed or variable and can be linked to the prime rate.
To be eligible for an SBA 7(a) loan, you will need to submit an application and get it approved. A lender will then review your financial standing and analyze your business plan. After approval, you will sign a loan contract and receive the loan funds.
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Unsecured working capital loans
When you’re starting out or expanding, an unsecured capital loan is an ideal financial decision. It can be used to buy equipment, expand your business, or to improve your building. The right type of loan can help your business grow.
It is much simpler than you might think to get a working capital loan. A loan can be obtained with just one page unlike the line credit. You can even fund your loan using 3 months of business bank statements.
Unsecured loans are characterized by higher rates of interest. This is because the lender is taking on more risk. In this regard, a business owner must have a strong credit score to be able to qualify. Also, you should 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 business. Using a working capital loan you can avail of lower prices on essential products and improvements to your facilities. A working capital loan can allow you to keep your business in business even in tough economic times.
An unsecure working capital loan offers another advantage: it doesn’t require the pledge of any of your assets. Typically, lenders will ask for the payment processor’s link and the deposit account.
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Small businesses have other financing options
Many entrepreneurs are choosing alternative financing models for small enterprises as their top choice. These flexible financing options can give you the cash you require for growth.
Alternative loans are also less expensive than traditional loans. Banks typically require huge down payments, and you might be waiting a long time before they can provide the money you require.
Some alternative business loan options include lines of credit, invoice discounting, credit cards and cash advances for merchants. All of these options give you the opportunity to obtain quick and easy funding.
Business credit lines are similar to credit cards, with the exception that they charge interest only on money you withdraw. These types of credit are particularly beneficial 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 best suited for major business changes.
If you are choosing a lender to get an alternative business loan, ensure you work with a company with years of experience. Also, think about your credit score. The greater your score, the greater your chances of getting the best financing deal.
Peer-to -peer lending is an alternative finance option for small-sized companies. Peer-tobusiness lenders offer small businesses loans through many investors, similar to crowdfunding. This option is particularly useful for small businesses who do not have collateral.