Everything You Need to Know About Business Loans
Starting a business is not easy — everyone knows that. But what many entrepreneurs don't realize is just how difficult it can be to actually secure financing for their new venture. Even with a solid business plan, finding the right financing option and getting approved for the amount you need can be a daunting task.
Luckily, Inc.com pulled together a cheat sheet for business loans to take some of the mystery out of business lending. What's more, this is what they have to say about borrowing from a credit union:
"[Credit unions] are often very willing to work with small businesses, and tend to have higher approval rates than big banks."
Take a look at some business loan types below — the Freedom First Commercial Lending Team is ready to answer your questions and find a product for you.
Freedom First provides a wide array of business loans for working capital, equipment & vehicles, and even real estate.
Typical Business Loans on the Market
These are just some of the business loan products available on the market. Be sure to ask our Business Team about what we have to offer at Freedom First.
Business Line of Credit
Revolving capital (think credit card)
Access to cash & lower APRs
Build credit score with on-time payments
Pay interest on funds you draw
Can require collateral, higher interest rates, or frequent documentation
Term Loan
Lump sum payment paid back over fixed term
Need to already be in business a few years, have a good credit score, and meet the minimum revenue requirement
Lower monthly payments, longer payment terms
SBA Loan
SBA 7(a) Loan, SBA Express Loan, SBA 7(a) Advantage Loan, SBA CAPLines Credit (qualifications vary by product)
Long-term, low-interest rate small business loans partially guaranteed by the government
Lower down payments, longer repayment terms, competitive rates
Lengthy approval process, may require collateral
Merchant Cash Advance
Lump sum of capital that you repay with a portion of your daily credit card sales
Quick access to funding
You may still qualify with less than stellar credit
Daily payments can add up to be more expensive than other loan types
Invoice Financing
Get paid for your outstanding invoices right away for a fee
Must provide invoices, be in business for more than 3 months, and meet the minimum revenue requirement
Repayment upon receipt of funds from client
Higher fees, especially if client repayment is delayed
Equipment Financing
Use equipment you're purchasing as collateral
Borrow up to 100% of the equipment value
Repayment over the life of the equipment
Equipment may become obsolete before repayment complete
Source: Inc.com
Please note that this article is not a listing of Freedom First business loan products. To learn about our business loan types, terms, and rates, please contact our Commercial Lending Team.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.