10 Types of Business Loans In the United States – In order to start up or expand your business, you’ll probably need to secure some financing to help you do it. However, there are many different types of business loans available in the United States, and choosing the right one can be tricky unless you know what each type offers and why you might want to choose it over another option. In this guide, we’ll discuss 10 of the most common types of business loans in the United States, as well as how to get them and what they’re best used for.
1) Factoring Companies Loans
A factoring company is a great option for businesses that have outstanding invoices. The company will purchase the invoice at a discount and then collect the full amount from your customer. This can provide you with much-needed cash flow to keep your business running smoothly. There are a few things to keep in mind when working with a factoring company, though. First, make sure you understand the fees associated with the transaction.
2) Online P2P Lending Marketplace For Small Biz Financing Loans
Kiva is an online P2P lending marketplace that connects small businesses in the US with loans of up to $10,000. Kiva offers loans at 0% interest for terms of up to two years, and businesses can use the funds for any purpose.
To be eligible for a Kiva loan, businesses must have been in operation for at least six months, have a minimum credit score of 640, and generate at least $50,000 in annual revenue. Interest rates on Kiva loans are fixed based on their term: 1-year = 10%, 2-year = 8%, 3-year = 6%.
3) SBA Loans
The Small Business Administration (SBA) is a government agency that provides financial assistance to small businesses. One way they do this is by guaranteeing loans made by private lenders to small business owners. This means that if you default on your loan, the SBA will pay back the lender. SBA loans are great for small businesses because they have low interest rates and flexible repayment terms. There are many different types of SBA loans, but the most common are 7(a) loans and 504 loans. A 7(a) loan can be used for either long-term fixed assets or working capital.
504 loans are typically used to purchase real estate.
The SBA also offers microloans of up to $50,000 which can be used as either short-term working capital or as an investment in plant equipment or property improvements.
4) Merchant Cash Advance Loans
A merchant cash advance is a type of business loan in which a lump sum is paid to the borrower in exchange for a percentage of future credit and debit card sales. This type of loan can be helpful for businesses that have difficulty qualifying for traditional loans, as it is based on future sales rather than credit history. However, merchant cash advances can be expensive, with high fees and interest rates. They are best suited for companies with recurring revenue from customer transactions.
5) Hard Money Lenders Loans
Hard money lenders are a type of private lender that offers loans based on the value of the property being used as collateral, not on the borrower’s creditworthiness. Hard money loans are typically short-term loans with higher interest rates than traditional bank loans. They are often used by investors to purchase and rehab properties.
6) BizFi Peer-to-Peer Lending Network Loans
BizFi is a great option for businesses that need funding fast. With BizFi, you can get up to $5 million in funding in as little as 24 hours. And because BizFi is a peer-to-peer lending network, you can get competitive rates and terms. Plus, it’s easy to apply: all you have to do is fill out the application on their website. If your application gets approved, you’ll be matched with lenders who are willing to lend money at rates determined by your credit score and the value of your collateral.
7) Corporate Debt Financing Loans
A corporate debt financing loan is a type of business loan in which a company raises money by selling bonds, debentures, or promissory notes to investors. The money raised is used to finance the company’s operations, expand its business, or pay for other expenses. If a company needs more funds than what it can raise through issuing securities, it may take out a bank loan. Debt financing loans are often secured against assets that the borrower owns; this means that if the borrower defaults on their payments then they risk losing these assets.
8) Term Loans
A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and either a fixed or floating interest rate. The loan is repaid in equal installments over the term of the loan, usually two to five years. Term loans can be used for a variety of purposes, including working capital, equipment purchases, and expansion. Because they are repaid in installments, they often come with low rates and long terms. However, many banks may require collateral such as inventory or property to secure these types of loans.
9) Asset-Based Lending Loans
1.Asset-based lending loans are based on the value of your company’s assets, such as inventory, receivables, and real estate.
2. This type of loan can be a good option if you have strong collateral but don’t qualify for a traditional bank loan.
3. Asset-based loans typically have higher interest rates than traditional bank loans, so you should only consider this option if you’re confident you can repay the loan and grow your business.
10) Equipment Leasing Options
Equipment leasing is a great option for businesses that don’t have the upfront cash to purchase the equipment outright. With leasing, you can make smaller monthly payments over the term of the lease, and at the end of the lease, you have the option to purchase the equipment for a discounted price. If you want to maintain your access to the equipment after the lease ends, this may be a good option for you. The downside is that with leasing, your costs are higher because you’re paying both interest on your loans as well as depreciation (the value of the machine decreases during its use).
