The average small business loan is about $633,000. You might not need that much to start a business, or you need more to purchase equipment and grow the business.
No matter what your business needs are, you need to find creative ways to finance your business. That gives you enough leverage to scale and grow faster than bootstrapping.
The challenge is looking for the best business loans that match the needs of your business without signing your business away.
What are the best small business loans? Keep reading to find out.
1. SBA Loans
SBA loans are business loans backed by the Small Business Administration. The loans get issued by private lenders.
These business loans have low interest rates. They’re seen as the best business loans available.
2. Invoice Factoring
Cash flow is often a big problem for businesses. It’s not always because of poor financial management, though. Some industries work with long lag times between service delivery and payment.
It could take months if there’s a purchase order involved. In the meantime, you have to pay employees and vendors.
Invoice factoring lets you get a business loan based on the amount of those outstanding invoices. You get the cash you need to keep your business moving.
3. Term loans
Term loans give businesses a large sum of money to buy fixed assets, such as a new warehouse or equipment. This loan gets paid back in installments.
The terms of the loan vary, but most last up to ten years. Think of these loans as standard business loans.
4. Equipment Loans
Do you need to purchase machinery or equipment? Maybe you need to get office furniture and computers for your employees?
That’s what equipment loans are for.
Make sure you read the terms of the loan carefully to understand what you can and can’t purchase with the loan. This will vary between lenders.
The equipment is likely going to be used as collateral for the loan. The lender has the right to take the equipment if you don’t pay the loan back.
5. Business Line of Credit
A business line of credit is closer to a credit card than a loan. Rather than receiving a set amount of money that you pay back in monthly installments, you get access to a set amount of money.
You pay it back according to your ability to pay and interest rate. This is an option if you know you can pay back the money and you have several purchases to make.
The Best Business Loans for Small Business
Are you ready to get the funds you need to start or grow a business? As you can see, you have options to fund your business.
Which loans are the best business loans for your business? If you need more space for your business, a term loan to buy property is a good option. For businesses that are waiting for purchase orders to get paid, get an invoice loan.
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