June 14, 2024

7 Different Types Of Business Loans You Should Know

4 min read
types of business loan

Not one or two; there are several reasons why you need to borrow money. While having so many financing lenders available, numerous choices also make it essential to conduct research before applying. Whether a small, medium or large business, you need to choose the right type of loan to meet your business requirements. 

We have curated a list of the most popular types of business loans that can help businesses in different aspects. Check out the list and choose the best fit for your requirement and preferences. 

SBA Loans 

SBA is Small Business Administration. They partially guarantee loans that banks and other Mayland mortgage lenders provide for small businesses. This type of loan eliminates the risks such as loss and encourages lenders to provide loans to small business owners. SBA is the most suitable product for small businesses outside traditional bank loans. 

Why should you get it –

  • Usually has a short-term period
  • Small installments 
  • Low-interest rate

Terms Loan 

A term loan is one of the popular types of loan. In this, you borrow a set amount of money and pay it back with interest on a specific repayment schedule. Business owners who want to invest in long-term business are suitable candidates for this type of loan. 

Why should you get it – 

  • Investing in real estate
  • Acquiring other businesses
  • Planning to expand business
  • Investing in remodeling or renovating commercial space

Short-term loans 

If you need cash in a hurry with fewer formalities, interest rates, repayment amounts, and duration, a short-term business loan is the best option. A qualifying short-term business loan is comparatively easy than other types of loans. Moreover, they are pretty affordable in terms of interest rates.

Why should you get it –

  • To repay debts
  • Purchase new assets

Equipements financing 

One of the most important loans is an equipment loan. This type of loan is suitable for small business owners who need to purchase and lease equipment for business, such as machinery, tools, vehicles, etc. Instead of a one-time payment for equipment, you can take a loan to fund the purchase and invest that amount elsewhere. One thing to note about this type of loan is it is available for already established or new businesses. 

Why should you get it –

  • To purchase tools, equipment, furniture, and other accessories for business
  • Replace old equipment 
  • Take equipment on lease

Start-up loans 

You need a loan to establish a business. Start-up loans are often available for the business with little to no funds. They are easy to acquire once you meet all the criteria of a start-up loan. A well-managed start-up loan may help you build a robust future business. This type of loan has less interest rate, repayment amounts, and repayment terms, making it the most popular type of loan. 

Why should you get it –

  • To establish a new business
  • Interest rate is low 

Invoice financing 

Invoice financing is required for B2B businesses that are facing cash flow problems from unpaid invoices. With invoice financing, lenders lend you a large percentage of your total invoice amount, approximately 80% to 90%, and hold onto the remaining percentage. Invoice financing is a great option for businesses dealing with several customers and paying at different times. 

Why should you get it –

  • To continue cash flow
  • Easy to get 
  • To use outstanding invoices 
  • To cover payroll
  • Payment of rent and other operating expenses

Commercial Real Estate Loan 

You will need a commercial real estate loan if you want to acquire commercial property, such as a retail shop, factory, office building, or manufacturing unit. Simple to get and easy to pay. But you need a property as collateral for this type of business loan. Commercial real estate loans depend on the lenders and the capital amount you need. Banks provide commercial real estate loans with lower interest rates and longer repayment terms. 

Why should you get it –

  • To purchase commercial property
  • Easy to approve

Benefits of business loans 

SBA Loan Maryland is the best way to invest in your business. They come with lots of benefits. People with insufficient funds or who do not want to invest all their savings in the business are the most suitable person for loans. Moreover, it benefits the borrower in the following ways- 

  • Reduce the need to invest a huge amount in one-time 
  • It provides you with funds to establish new business
  • Beyond saving money, it also boosts credit scores 
  • Minimizes your credit card payment with loans with lower interest rates

Whichever type of loan you choose, do proper research on the lender. It should be reliable, easily accessible, and offer quality customer care services. The lenders with such attributes are the most preferred money lenders.

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