Short-term and Long-term Loans for New and Existing Businesses

by admin on March 10, 2014

Businesses are offered different types of financing, including small, start-up, and franchise loans. The type to choose depends on factors such as sector and industry, amount required, interest rate, and others.

Business Loans and Requirements

There are line of credit loans, angel investment, SBA loans, and many others. Many businesses apply for government financing and small grants. The funds can be used for different purposes, including the purchase of commercial vehicles, machinery and equipment, renovations to buildings and premises, land, and others. Start-ups, new, and small businesses qualify. The requirements are different for new and existing businesses. The amount also varies depending on the purpose, i.e. the purchase of equipment, land, or premises. Loans are also offered to businesses that seek to finance improvements and leaseholds. The goal is to help companies expand and reach new markets and new businesses to get started. Businesses seek financing to expand, cover operational expenses, develop new products, and more. They can use the funds to finance leasehold improvements, production facilities and equipment, software and communication equipment, and buildings. Applicants can choose from fixed and variable rate loans. The loan cannot be used for research and development, franchise fees, or inventories. With some loans, collateral may be required, but not all assets are acceptable. businessIndividual retirement accounts, mutual funds, jewelry, and perishable inventory cannot be used.

Loans from Private Lenders

In addition to government financing, there are loans from banks, credit unions, and non-bank lenders. They usually offer a higher interest rate compared to funding under government programs. The requirements and criteria vary from lender to lender, but they are usually interested in your credit history, feasibility and profitability of the business, educational background, experience, business plan, and more. Your credit score is an important factor in that an excellent score shows to banks that you are a trustworthy borrower. Applicants with an excellent credit score are offered attractive deals and competitive interest rates. Some banks also require a valuable asset to be offered as collateral. This can be real estate, land, equipment, commercial vehicles, and others.

If you apply for a business loan with a private lender, you can use the money to pay off debts, purchase real estate and equipment, buy assets, and for your normal operations.

Other Options

There are other options for businesses, including grants, revolving lines of credit, loans from friends and family, and angel investors. While your family may offer a small loan, they probably won’t write a check for $1 million to fund your business operations or expansion. Angel investors are one option whereby individuals offer capital to new businesses and entrepreneurs. Other options include commercial real estate, unsecured and secured working capital loans, residential equity lines, equipment leasing and financing, and others. There are also business only and hard money equity loans.

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