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Is your company waiting for a large sum of money to continue daily operations? There was a time when entrepreneurs believed that taking out large loans was a sign of a dwindling business process. However, finance and marketing experts of the day emphasize the importance of large capital loans for the sustenance and growth of a business. Business loans signify expansion, but how can you get a business loan in 2018 especially when there are over 30 million small businesses in the US? Thankfully, there are multiple options right now for securing business loans of any amount. Whether you need a loan to start your enterprise or to expand the existing one, you may try multiple avenues that fulfill all your business requirements.
There are several types of large business loan sources you can try depending on your credit score, urgency level, purpose and the availability of collateral. Here is a comprehensive list of the different loan types you can access –
Equipment financing – Finding the correct equipment financing option is critical since it can help you finance 100% of the cost of the new or second-hand equipment your business needs. In most cases, equipment loans are fast ways to gain access to necessary funds for the purchase of supplies, machinery, vehicle, and computers.
Equipment leasing – An equipment lease enables a business owner to use a piece of equipment for a flat monthly fee. The user (entrepreneur) does not own the machine but has it on lease for a year or so. After the contract ends, the borrower can choose to buy the machinery from the owner at the fair market value.
Traditional bank loans – Banks are the first thought that pop into our head when we start thinking about investments. Conventional bank loans carry lucrative interest rates and offers for small business owners, but it is also true that about 72% of applicants face rejection from banks. They help in building business credit, provide multifarious uses of the sum, and they have fixed interest rates. However, the prolonged processing period and high credit requirements have compelled the majority of small businesses to turn to other alternative forms of lending.
Invoice factoring – It is a brilliant, albeit conventional way of borrowing money against pending invoices. One of the advantages of invoice factoring is a business will be borrowing money it has already earned from its customers. It can help with cash flow, business employee payment, and vendor payments. Invoice financing is a quick and cost-effective cash accessibility option for all businesses big and small, old and new.
Cash flow loans – Cash flow loan is a smart way of borrowing money from a financial institution based on the revenues the business expects in the near future. It helps in bridging the cash flow between two successive business months or quarters. It is an unsecured loan but is one of the fastest business loans there is.
Business cash advances – Business cash advance or merchant cash advance is an interesting and effective way to find quick funding. The entrepreneur receives a lump sum amount against revenue that future credit card sales will generate. The repayment amount depends on the fluctuations of your monthly business profits. They fit the needs of small businesses and start-ups perfectly, but an increasing percentage of large companies are also going for merchant cash advances.
Asset-based financing – In contrary to Cash Flow Loans, Asset-based loans are secured loans. Asset-based funding requires the entrepreneur to acquire the loan amount against the liquidated value of business assets. The collateral can be real estate, equipment, vehicles or company inventory.
Each type of large business loanshas its pros and cons. You should not judge the potential lender only by the amount they are willing to lend. Learn about each process, the processing fee, repayment structure and penalties before you sign the dotted line.