15 types of business loans
Did you know there are more than fifteen types of business loans available to small businesses? Understanding your options can help you to make an educated decision about financing, and will likely help you be more likely to qualify.The following is a brief look at the fifteen most common types of business loans:
1. SBA loans- These are the most typical as they are government backed loans to small businesses given through private sector lenders. An SBA loan is a secured loan, where funding is offered from one to six months, and the payback period is five to twenty years.
2. Professional loans- These are loans offered solely to those with professional licensure, such asfor doctors, dentists, and lawyers. They can be secured or unsecured. The funding is two to six months.
3. Equipment financing- These are loans used to purchase equipment, with the equipment to be used as the collateral on the loan. Funding takes one to three months. Clearly if the equipment purchased is collateral, this is a secured loan.
4. Equipment cash out refinance- Get cash for existing equipment and lease it back from the lender. The lease value is approximately 50-75% of vendors valuation. The funding is one to two months. It is a secured loan.
5. Accounts receivable factoring loans- The way this works is it is collateral for short-term working capital loans. The funding is less than a month, and it is a secured loan.
6. Franchise start up loans - These loans are specialized financing that are reserved for nationally known franchises. It requires 10-30% of the capital needed to come from the borrower, it is a secured loan.
7. Business acquisitions- These are loans used to acquire an existing business. Funding takes one to nine months. They are secured loans.
8. Line of credit- These are pre-arranged amount of credit based upon existing inventory. A/R and PO's or up to $200k in business credit based on credit worthiness, and without collateral. These can be secured or unsecured loans. Funding is 2-6 months.
9. Construction financing- These are loans for commercial construction. The payback period is ten to twenty-five years, and it is a secured loan.
10. Hard money equity loan- These are loans available from local bank lenders, but are really hard to obtain. Funding takes one to two months, and it is secured financing.
11. Working capital loans- These are loans that finance everyday operations of a business. The funding takes one to three months. They can be secured or unsecured.
12. A/R or P.O. Financing- Serve as collateral for short term working capital loans that you can obtain fast and cost effectively. Funding takes one to two months. These are secured loans.
13. Merchant cash advance- Up to $150,000 advance against regular occurring monthly credit card sales. Funding is less than one month. It is a secured loan.
14. Start-up loans- These are loans offered to small businesses from private sector lenders. The funding is between one to five months, and the payback period is five years. These are secured loans.
15. Peer to peer loans- These are loans that the borrower receives from another individual rather than a lending institution. The funding takes one to three weeks. They are secured loans.