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BUSINESS
LOANS
What Are Business Loans?
Business loans can be defined as money lent for a
specified amount of time at a specific interest rate to
a specific person or people that operate a business or
plan to operate a business. This definition is very
broad, but so are the various types of loans available
to business people. Deciding on which type of business
loan that you and your company will benefit from the
most is very important. Often times, a start-up business
or someone that has never owned a business will find
themselves more or less applying for a “personal” loan.
This can be a very risky endeavor, mixing business loans
with personal loans, however, often times it is the only
available means for first time business owners.
One of the first things personal business owners need to
do is establish business credit. Business credit can
help you get a business only loan without using your
personal credit. Establishing business credit can be
done by:
1.) Opening up a business credit card account and paying
it in full.
2.) Buying equipment and supplies from companies that
will report good standing to the business credit
bureaus.
3.) Having a good business plan with potential earnings,
letters of intent, and any type of customer contracts
already laid out.
All of these types of endeavors can help in receiving a
business loan. Often times, financial institutions
require in-depth business plans, be prepared to spend
days working on just the certification paperwork prior
to applying for a business loan. A business only loan
can be obtained in the business name without use of
personal credit as long as the business can justify the
loan amount and the ability to pay it back.
There are several different types of business loans
available, ranging from those secured with collateral,
non-secure loans, which are based upon the credit
worthiness of the applicant, and even government loans
for small business ventures, women and minorities.
Government loans are those loans secured by the
government; in most instances these loans are available
when the business or owner can prove that the community
will prosper based upon the business at hand. For the
most part, government loans are based upon personal
credit.
The basis for which you may need or require a business
loan may vary. Some of the most common business loans
available to business owners are:
* Acquisitions or a loan to acquire an existing business
* Inventory loans
* Account Receivable Loans
* Working Capital Loans which converts a companies
assets into working capital
* Equipment Leasing
* Commercial Property loans
* Warehouse financing
* International business loans
* Franchise loans
One of the most important tools when deciding on what
type of business loan your company needs is research.
Researching the different types of loans available to
you and your company can save you money. First, look
into the different type of business loans available to
you in your state. Many states have government loans
available; some even offer grants, which is money
available for specific purposes that do not require
repayment. Research the different type of Federal loans
available. You can do this at the following website:
www.sba.gov. Call your local bank and investment
companies regarding the business loans they have
available for you. Many times, business loans are not
that hard to acquire. With research and a good business
plan, your dreams may come true.
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