Best loan products for small businesses
Bank loans are a great way for small businesses to get start-up capital or money for improvements to the company.Banks are generally in a position to loan a higher amount of money than other loan products, but will most likely require more in return.For example, banks often want to see a well developed business plan, a good credit score, and may require collateral. If a potential business owner is in position to meet all of these requirements, a bank loan is a great way to go.
Community Development Corporations (CDC)
Many cities and communities have community development corporations.These are businesses that are established to help boost the economy through small business development.Many will offer financial help to businesses looking to get started or improve.CDC's are sometimes more likely to loan money to higher risk clients.These loans will have a set interest rate depending on the policy of the corporation.
Many federal, state, and local governments will have money available for people who wish to start a company or wish to improve a company.The government usually has specific niches of people that they will give money to, or they may require that a business do certain things to help the community.For instance, if a company has a development program for their employees that gives them specific usable training, the government may consider granting the company free money or giving them a loan for a low interest rate.If a small business is able to meet the conditions for a government grant or loan, then that is an excellent way to get capital.
Individual Development Accounts (IDA)
Some communities or cities will offer individual development accounts.These are accounts where potential business owners or current business owners can deposit a certain amount of money in a savings account monthly, and the IDA will match, double, or even triple that money.Each IDA will have different restrictions on who can benefit from this help.Granted, this is not a loan, the money will be free, but using an IDA is a great way to get capital quickly to get a business up and running or further develop an already existing business.
Loans from credit unions will be very similar to banks, except that, generally speaking, credit unions do not have the same kind of negotiating power when it comes to small business loans.Credit unions may be more flexible when it comes to a potential business owner's credit score.They may also be able to offer a better interest rate.
Small businesses have many different options to choose from when looking for a loan product with which to start or expand.Potential business owners and current business owners should make sure to connect with community advisors or other small business services that can guide them toward the best loan product for their specific needs.Or, if these services are not available, they should be sure to do the best possible research to ensure that they choose the best loan product possible.