What Are Different Types Of Small Business Loans - Bryant Business

josh bryant • March 26, 2024

Starting or expanding a small business is an exciting journey, but it often requires capital that you may not have on hand. Fortunately, various types of small business loans can provide the financial support you need. Understanding the options available can help you make an informed decision that aligns with your business goals and financial situation. Here are some of the most common types of small business loans:

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1. Term Loans

Term loans are what most people think of when they hear "business loan." They provide a lump sum of cash upfront, which is then repaid with interest over a predetermined period, or term. Term loans are ideal for funding specific, one-time investments such as purchasing equipment or expanding operations.

2. SBA Loans

The U.S. Small Business Administration (SBA) offers several loan programs to help small businesses. SBA loans are known for their favorable terms, including lower down payments, flexible overhead requirements, and no collateral for some loans. However, the application process can be lengthy and requires a lot of documentation.

3. Business Lines of Credit

Unlike a term loan, which provides a lump sum of cash, a business line of credit offers access to funds up to a certain limit that you can draw from as needed. This makes it a flexible option for managing cash flow, handling unexpected expenses, or financing short-term needs without committing to a long-term loan.

4. Equipment Financing

Equipment financing is specifically designed to fund the purchase of new or used equipment. This type of loan is secured by the equipment itself, which means the equipment serves as collateral. Equipment financing can cover up to 100% of the cost, making it easier to invest in high-quality machinery or vehicles for your business.

5. Merchant Cash Advances

A merchant cash advance (MCA) provides a quick infusion of cash in exchange for a portion of your future credit card sales. MCAs are known for their high approval rates and fast funding times, but they can also come with high costs and daily or weekly repayment terms, making them less ideal for some businesses.

6. Invoice Financing

Invoice financing allows businesses to borrow money against the amounts due from customers, providing immediate working capital to improve cash flow. This can be particularly useful for businesses with long invoice cycles or those that need to free up trapped cash.

7. Microloans

Microloans are small loans, typically less than $50,000, designed to help startups and small businesses with limited access to traditional banking services. These loans can be used for working capital, inventory, supplies, furniture, fixtures, machinery, or equipment.

8. Commercial Real Estate Loans

These loans are used to purchase or renovate commercial property. Commercial real estate loans are typically secured by the property being purchased and can offer longer repayment terms.

Conclusion

Choosing the right type of small business loan depends on your business needs, financial health, and long-term goals. Whether you're looking to manage cash flow, purchase equipment, or expand your operations, there's a financing option out there for you. Carefully consider the pros and cons of each type of loan and consult with a financial advisor to make the best choice for your business.

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We are the most competitive because we work with every reputable lending source. Many online lenders will provide an over-abundance of options that you must sift through. At BBL we believe that you shouldn't have to do all of the heavy lifting; when you apply for a loan we assign you a funding expert to help you obtain the best funding option for your business.

Features
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✓ No Collateral Required	✓ Fixed Payments That Blend In To Your Cash Flow
✓ Approve To Fund In As Little As 24 Hours	✓ Simple Presentation Of The Cost Of The Loan