One of the most challenging elements of opening a business is securing funding for capital. Even if you have a good business concept which is likely to succeed, the realisation of your goals will only begin once you have a sum of money for starting operation.
There are different kinds of funding sources available for small businesses. However, the type of loan you secure for your company varies significantly according to your needs. One type of loan may be suitable for a different purpose, which is why it is vital to ensure that you are choosing the perfect fit for your funding needs. Here are the different types of business loans we offer.
Unsecured business loans
The most straightforward description of an unsecured loan is when a lender agrees to let you borrow money without asking for security or collateral. You can get commercial business loans from Become.co that are unsecured provided that your company has a good track record of repayment. An unsecured loan may not be the most suitable to use as capital for a new business because you will have to prove your company’s profitability or ability for repayment. It is best for businesses that are looking for short-term funding used for expansion or immediate expenses.
A business line of credit
Lines of credits for business work similar to a credit card. You will receive a line of credit to which your business can draw funds. It is more flexible than fixed term loans because as you pay up what you have borrowed, you are freeing the line of credit for future borrowing. Similar to unsecured loans, business lines of credit do not require collateral. It is suitable when companies need funds for short-term expenses.
Invoice factoring
Many businesses rely on their customer’s payment to operate. As such, if you have unpaid invoices from customers, you can get strapped for cash real quick. One solution to this is invoice factoring; an invoice factoring company like us will buy the unpaid invoices from your customers. We will then take care of the payment collection on the due date. This option is one of the quickest ways a small business can free up cash used for operational expenses.
SBA loans
These loans are offered by banks and other non-traditional lenders like Lending-Express which are guaranteed by the Small Business Administration. SBA loans are preferred because you can borrow large amounts with a corresponding long-term repayment. Businesses that are looking for capital often consider applying for this type of loan.
Merchant cash advance
This type of loan is one of the fastest ways to get cash for your business. You will receive a lump sum amount up front. The method of payment is different from a fixed-term loan. The fee to the loan will be made through a percentage of your business’ credit or debit card sales withheld or withdrawn from your bank account. A merchant cash advance is an ideal solution for companies that have consistent high sales coming from credit card payments and have no other means of securing funds from other lending options.
