You have several options when it comes to obtaining business loans so you have the financing you need to start or manage your company. Term loans, which you obtain from a bank or credit union, are one of the most common types of business financing. If approved, the lender provides you with a lump sum and then you repay the loan through monthly payments with interest added. You may need to make a down payment or put up collateral to qualify.
Loans Backed by the Small Business Administration (SBA)
You also obtain these business loans from a bank or credit union, but they differ because the SBA has guaranteed repayment on your behalf. The benefit of SBA backing is that interest rates are usually lower, the amount you qualify to borrow is higher, and you can take a longer time to repay the loan with lower monthly payments.
Accounts Receivable Financing
Cash flow is a problem for a lot of new and small businesses. Although they may have a high accounts receivable balance, customers can take 90 days or more to pay what they owe. Some accounts also go to collections for slow or non-payment.
To obtain the money your business needs now, you can sell the face value of one or more unpaid invoices to a factoring company. It bases its lending decision on the creditworthiness of your customer and collects the money from that company and not yours when the invoice comes due.
Business Line of Credit
This is one of the more flexible types of business loans. You receive a credit limit and then can take out cash against that limit to use in any way you see fit. The lender only charges interest on the amount you use and not your full credit limit.
These are just some of the options for business loans you may have. We invite you to contact Grecco Capital to learn of other ways we may be able to help you.