If you are looking to finance your small business using a loan, you have a few different options that you can explore. Each one has its pluses and minuses so it is essential that you assess all of your options and choose the loan that is right for you. When you do your research and pick wisely, you will easily find a great finance solution for your small business! Here are our top 5 types of loans to consider.
1. SBA Loan
The Small Business Administration partners with many banks across the country to give out sba small business loans that can provide good value. This is perfect for a small business that may not require a lot of capital but needs just a little bit extra cash. In addition, SBA loans are government backed so a lender may be more willing to help you with this kind of a loan. An SBA loan will require a good amount of paperwork and can take several weeks or longer to get approved as each loan is reviewed individually by the SBA. Businesses with a strong credit history or business profile are most likely to get approved.
2. Personal Loans
If you are a small business owner, you may want to consider taking out personal loans to fund your business rather than go through the business itself. You can get personal loans through your own bank, through credit unions or even online and if you have a good credit history, then getting a personal loan should be quite easy to attain. Many personal loans can be approved and delivered almost instantly, getting you the money that you need for your small business quickly. Personal loans are ideal when your business is newer and does not yet have an established financial history.
3. Merchant Cash Advance
If you have already been open and operating your small business, you may have built a relationship with a merchant processor, or a company who processes your credit card transactions. These companies may be able to give you a cash advance, in turn getting any of your future revenue via credit card sales. The Merchant gives you the cash you need on the spot and then takes a portion of all your credit card sales moving forward as repayment. This can be useful as you can get cash right away and you already have a system in place to pay back the loan.
Crowdfunding can be a great way to get cash for your small business if you have an especially inspiring story or an amazing new product that you want to sell. You can write your story and post it online for anyone in the world to read and review. If people believe in your business, they can lend you or just give you money (depending on how the crowdfunding is set up, this could be a loan or simply a donation). This is an easy and free way to get some cash for your business but it can sometimes take a while to catch on.
5. Credit Card Cash Advance
If you have a credit card for personal use or for business purposes, you may be able to take out a cash advance to use for your business. When you need money in a hurry, this can be a good option as you already have the credit card in hand. However, be aware that many credit cards charge high interest on cash advances in addition to withdrawal fees. Be sure your business will be able to pay the credit card bill when it is due!