Other Types of Business Loans and Alternatives

by admin on July 22, 2014

Business loans are offered to start-ups, entrepreneurs, corporations, and new and small businesses. Many businesses apply for government financing because of the longer payback period.

Types of Financing

Applicants for business funding can choose from disaster and real estate loans, micro-loans, and others. Private lenders are also a source of funding, offering lines of credit, conventional and commercial loans, etc. Applicants can choose from unsecured and secured loans, and the latter feature lower interest rates. Financial institutions accept different assets as collateral, including real estate and natural reserves. Unsecured loans are offered to regular and creditworthy customers because collateral is not required. Other types of financing include peer to peer loans and equipment cash out refinance. Borrowers who opt for equipment and vehicle loans can use the funds to purchase machinery, trucks, vans, and so on. Banks also provide real estate loans to construct or purchase industrial, retail, and apartment buildings. Financial institutions also offer permanent and owner-occupied financing. Lenders also provide micro-loans to businesses that are looking for funds to expand or start an enterprise. The money can be used for the purchase of machinery and equipment, furniture, supplies, and so on. The interest rate usually varies between 8 and 13 percent. Businesses also apply for short-term loans with attractive interest rates. In addition, there are small business loans under different government programs that come with attractive interest rates.

How to Apply

Banks require documents such as licenses and business certificates, loan application forms, and others. Borrowers are asked to provide documents such as bill of sale, copies of business leases, and others. One of the requirements is to prepare your financial documents and statements and make them available for a review. You may need to provide verification of non-business income, including public assistance, retail income, and paystubs. Banks are also interested in your business profile – length of time in business, history, number of employees, sales volume, etc. Legal documents to submit include commercial leases, franchise agreements, and others. Some banks also require that applicants submit copies of contracts and business registrations. Make sure you write a solid business plan to increase your chances of getting approved.

Other Types of Loans and Alternatives

Secured and unsecured working capital loans are available, and the latter are offered to customers with a good credit profile. There are different options to consider, including residential equity lines, construction financing, as well as business acquisition loans. Franchise loans are another variety whereby funding is offered for the purchase of recognized franchises.

Comments on this entry are closed.

Previous post:

Next post: