One of the commonest challenges faced by millions of small business owners in the United States and across the globe is the lack of fund to actualize their ideas and grow their business. This is in addition to the fact that reliable cash flow is not only difficult to achieve but is usually not enough to meet the needs of business owners. Consequently, owners of such businesses sometimes have to resort to loans to achieve their goals. However, it is important for businesses to understand the different small loans for business available as well as their features before putting pen to paper.
Types of Small Loans for Businesses
Entrepreneurs have a plethora of funding options to choose from and below are some of the very popular ones.
- SBA Loans are Small Business Administration Loans that are partly guaranteed by the government, making them some of the best options available for small business financing.
- Conventional Term Loans from a Bank come with a strict approval process, which often makes them very tough for small business owners to get approved for a term loan from a bank.
- Business credit cards can provide small business financing more quickly than a loan, and they can be very helpful for certain purchases.
- Merchant Cash Advance, or MCA, is an agreement in which the lender gives the borrower advance cash up front. MCA is relatively easy to obtain and borrowers often get the money within a few days.
- Invoice factoring is when the lender buys unpaid invoices from the business, giving the business owner most of the invoice amount upfront.
Alternate lending options available to small businesses include online lenders and lending marketplaces.
The plethora of funding options available to small businesses can only be of benefit to business owners if they are discerning in their choice of financing.