Grow Your Startup: The Top 5 Business Loans for Small Businesses

by:

Finance

Starting your own business is never easy. If you even manage to start your business on a good note, keeping it afloat is your next big hurdle. Fortunately, there are plenty of financing options for businesses that struggle with financing when starting up.

So your greatest hurdle is deciding which financing option is best for your bet. You need to find a business loan that grows your business without risking your primary assets.  

In this piece, we’ll look at five of the best business loans for small businesses. Loans that will cater to small startups helping them in their journey to prosperity.

Why Do Small Businesses Need Funding?

Even very small businesses need some sort of funding. It doesn’t have to be specifically a bank loan. There are some other ways companies can seek financing to grow their businesses.

 Some businesses seek financing from crowdfunding, angel investors, and even get funding from friends and family.

Here are a couple of reasons why small businesses seek funding:-

1. To Get Working Capital

Any businesses need steady cash flow to remain afloat. Maintaining this initial cash flow is what most startup business owners struggle with.

Without this working capital, you may have to shut down your business. So it is paramount to have enough capital to run your business smoothly. That’s why lots of businesses seek funding for working capital.

With this working capital, businesses can grow to their potential and maintain steady cash flow. 

2. To Restructure Debt

It’s not uncommon for small businesses to seek financing to take care of debt. Business is a game of numbers, and sometimes financing is your only way to balance these numbers. 

For instance, if you have to make monthly payments for any debt, you can pay the lump sum. You’ll get this lump sum amount from financing. It will save you the hassle of having to bother with payments every month.

If your debt is due, you can save your assets by seeking additional financing while you get everything today.

3. To Purchase Assets

More assets translate to greater profit generation. After you’ve crunched the numbers and find it propitious to acquire a particular asset, a business loan will enable you to purchase the assets and rake in cash.

4. To Grow Your Business

Your business may need a little boost to reach its full potential. When things are moving slow, it may be hard to take your business to the next level.

Fortunately, financing is a stepping stone to an established and thriving business. When your business also grows too fast, you may need financing to keep up with the pace.

If you’re a business owner, you understand all too well the importance of financing for your business. 

That said, let’s proceed to check out some of the best business loans you should opt for this year.

Amazing Business Loans for Small Businesses

Small businesses need a financial helping hand to realize growth, especially during the first stages. Thus, the problem for most startup business owners is deciding which business loan is suited best-suited for them. 

Here are a couple of business loans, you should consider for your small business.

1. Bank Loans

Banks are the first place everyone thinks of when it comes to business financing. For small business owners, banks are your listening and caring partner. Of course, the catch is that the banks will need a little interest as part of the financing.

In 2017, about 40% of business owners across the country applied for a business loan.

Banks are pretty flexible when it comes to business loans. You don’t need to have staggering amounts of assets to get a bank business loan. You also don’t need to use all your assets as security. 

Some banks may also consider invoice factoring as a loan repayment option

If you’re looking to apply for a business loan for your business, then consider a bank loan. However, you may want to learn about how to get a business loan from the bank.

2. SBA Loans

SBA abbreviates Small Business Administration. SBA loans are loans guaranteed by the Small Business Administration.

These loans are specifically meant for small businesses. SBA loans crystallized after banks became reluctant to finance businesses because of the credit crisis. 

These loans are ideal for small businesses for the following reasons:-

  • Low-interest rates that won’t eat up on your profits
  • Flexible repayment terms including longer repayment dates
  • As a bonus, you also get to take advantages of SBA resources
  • Apart from the lower interest rates, you also get lower down payments

However, you need to meet the following criteria to qualify for a small business administration loan:-

  • You need to meet the government’s definition of a small business (Hint- the size of the business premises does not determine whether a business is a small business)
  • You’ll need to go through a financial company before getting this type of loan
  • You first have to be turned down by a bank or financial institution to qualify

3. Installment Loans

If you know how a mortgage or car loan works, then you have a bit of experience with installment loans. Mortgages and vehicle loans are examples of installment loans.

Installment loans come in one huge lump sum. You then have to pay off this lump sum loan in small periodic installments. The interest rate will determine the total borrowing fee.

4. Short-Term Loans

These loans are somewhat similar to installment loans. However, the borrowing fee is determined by a factoring rate.

5. Equipment Loans

These are loans that lenders give to small businesses for specifically purchasing equipment.

6. Title Loans

These are the loans that need an asset as security. Title loans are well known for two key things. First, an applicant’s credit rating is not taken into account when defining credentials for the loan. And secondly ,thanks to less rigorous application necessities, a title loan can be accepted quickly for aggregates as low as 100 USD.

Financing Your Small Business Shouldn’t be Difficult

Business loans for small businesses are varied. Your greatest challenge now is to find which funding option is the best for your business. Remember to weigh all your options before settling on a business loan.

Don’t be too hasty to borrow large amounts. Remember to consider the borrowing fees and the repayment plan too.

Remember to check out our other articles for more informative reads.

Leave your vote

0 points
Upvote Downvote

Comments

0 comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.