Knowing the correct type of loan to ask for is essential in getting the bank to approve your desired loan. Banks have many different loans available and it is necessary for you to have a written business plan in place before approaching the bank of your choice.
Also, business owners have several types of funding choices, based on various factors about your business. Some of the programs available through the Business Credit Services are below.
Types Of Business Loans (Explained Basically)
Secured Working Capital Loans
These loans are secured by collateral. The lender will take a security interest in your property. If you do not pay the loan back the lender has the right to seize your collateral. Most lenders will require collateral to secure a small business loan. Lenders will not lend you more than 100 percent of the value of your collateral and will usually only lend you 60 to 80 percent of its value.
Unsecured Working Capital Loans
As the name implies, these are loans that are not secured by any collateral. Credit cards, while not technically loans, are the most common example of unsecured debt. The lender is loaning you money based on your reputation and credit worthiness. It is very. very rare to find a lender willing to give you an unsecured loan for a new business. Because you have no track record for them to work from.
Start-up Loans
Loans for the new or start-up businesses
Commercial Real Estate Loans
Commercial Real Estate loans with fixed or variable terms.
Business Acquisitions
Loans to acquire an existing business.
Accounts Receivable Factoring
Accounts receivable serve as collateral for short-term working capital loans that you ca obtain fast and cost effectively.
Merchant Account Cash Advance
Up to a $50,000 advance against regular occurring monthly merchant credit receipts.
Franchise Start-up Loans
Specialized financing reserved for the franchises of recognized, typically nationally known, franchises.
SBA Business Loans
Loans to small businesses from private-sector lenders (banks, etc.), which are guaranteed by the SBA. The SBA has funds for direct lending or loans to small businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.
Lines Of Credit
A pre-arranged amount of credit based upon existing inventory, A/R and POs or up to $200,000 in business credit based upon credit worthiness with no collateral.
Equipment Leasing
An easier way to find financing for your equipment needs and obtain tax benefits at the same time.
Hard Money Equity Loans
Loans available that are typical hard to obtain from a local bank lender.
Equipment Sale-Lease Back
If you have existing equipment, sell it and then lease back the equipment. Essentially you get cash for your equipment and then lease it back.
Construction Financing
Loans for home or commercial construction.
Business Only Loans
Loans can be obtained in the business name without the use of personal credit as long as the business can justify the loan amount and ability to pay it back.
Residential Equity Lines
Lines of credit secured by the equity in your home.
There are also short-term and long-term loans with the above. So study before heading to the bank and it will help you with many of the questions you will have.
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