The reality of the matter is that starting and running your own business isn’t cheap, and it’s easy to get overwhelmed with the cost of doing business when you’re first starting out. You may have heard that there are plenty of small business loans available to help offset the costs, but what kind should you look into? This article outlines seven of the best small business loans to help you grow your business.
SBA Loan
The SBA 7(A) Loan is one of seven government-backed loan programs that are available to small businesses. As its name suggests, an SBA 7(A) Loan is offered through the U.S. Small Business Administration (SBA). And like most SBA loans, it comes with a number of advantages including low-interest rates and long repayment terms.
Credit Union Loan
Credit unions are often local and community-focused, so if you’re just starting out, you may find it easier to get a loan from a credit union. In fact, some offer small business loans with as little as $1,000 in startup capital. If your business is still in its infancy and has few assets or collateral for a lender to evaluate, stick with short-term lines of credit and business credit cards.
Merchant Cash Advance
This kind of loan is like a turbo-charged version of a business credit card. In addition to a low-interest rate and reasonable repayment terms, it can offer you more cash upfront than your credit limit, meaning you can purchase inventory or equipment without waiting for a check from your distributor. And there’s no impact on your personal credit report if you don’t pay off your advance on time. A merchant cash advance is one of the best small business loans around.
Line of Credit
A line of credit is a revolving, unsecured loan. Essentially, you have access to a pool of money that you can use when and how you need it, up to your credit limit.
Personal Loan
If you’re looking for a loan up to $100,000, a personal loan might be your best bet. With interest rates that can be as low as 5% (depending on your credit score), personal loans are designed for a range of uses, from buying a car or starting your own business, to consolidating debt and paying off high-interest rates cards. This type of loan has no collateral; lenders usually base their decision solely on your credit history and employment history.
Invoice Factoring
A factoring company pays you upfront for your invoices, and you can use that money as you see fit. This helps your business get paid immediately, which means less time chasing down payments and more time running your business.
Equipment Leasing
If you’re looking for a source of funding for your small business, leasing may be an option. Unlike traditional loans, equipment leasing often requires less paperwork and can get you up and running quickly—ideal if you have a new product or service to sell. But just like any loan, there are advantages and disadvantages that come with every lease. Before deciding on a lease, weigh your options carefully so you make sure it’s right for your business.
