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Guide to Business Loans and Funding

3 min. read


Apr 4, 2018

No matter your business, you require capital to operate. Whether for payroll, new equipment, inventory or taxes, the need for a steady influx of funds is constant.

Many small businesses have about 27 days of buffer cash available for spending. If your company must cover an expense that surpasses your reserve, it may make sense to consider small business financing.

Several options exist for business loans and funding. Here are some of the best small business loans.

Term Business Loans

Also known as an installment loan, a business term loan gives you a lump sum of money upfront. You pay off such a loan in installments, including a predetermined amount of interest with each payment.

How long you pay off a term loan will depend on a variety of factors, including how much money you borrowed and the type of term loan. Standard term loan payoff periods are usually from one to seven years. Short term business loans are generally for three to 18 months.

Short term loans tend to be for smaller amounts than standard term loans. Standard loans range from several thousand dollars to up to $1 million.

You can get a business term loan from a bank or online lender. Get loans online and you can expect fast business loans compared to traditional bank loans. When it comes to qualifying, online loans tend to be some of the best business loans. Of all loans, online are easy business loans that provide fast business funding. They do often feature higher interest rates, however.

Unsecured Versus Secured Business Loans

Secured business loans have a form of collateral attached to them. For instance, you might put up as collateral a piece of equipment or a vehicle. If you were to default on the loan, the lending company could take your property as repayment.

An unsecured business loan has no collateral pledged against the loan as a form of secondary payment should you default. Generally, only established businesses that show a creditworthy track record of paying off prior loans on time will get a small business loan unsecured.

SBA Loans

The Small Business Administration (SBA) doesn’t actually make business loans. Instead, the organization provides a guarantee to banks and lenders for the money. These low-interest loans are administered by a variety of SBA-approved lenders.

The SBA’s general small business funding is known as the 7(a) loan program. This program is designed for businesses that are starting up, expanding or buying inventory, equipment or land.

SBA loans are monthly installment loans that feature some of the lowest business loan rates and down payments available. You can borrow anywhere from $25,000 to $5 million. Repayment terms depend on the use for the money.

On the downside, it’s not easy to qualify for an SBA loan. The application process is rigorous and lengthy. SBA loans aren’t ideal for fast small business loans.

Having adequate funding at your disposal is important to the health of your business. If you require a business capital loan, it may be time to apply for small business loan.

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