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A List of Loan Options for Your Small Business


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TERMINOLOGY

Finding a loan for small businesses does not need to be difficult. There are still plenty of banks for small businesses that specialize in small business lending. Plenty of these lenders have loans that businesses can use to start or grow their business. Here is a look at what different services can be offered.

Mini Bonds

A mini bond is an option that is focused on small businesses. These loan programs are focused on providing the capital a small business needs to begin or complete a project. Mini bonds are offered by banks, government institutions and individuals that have a special interest in the business or are trying to give a boost to small businesses in their community.

Mini bonds are also a great investment for those looking for long term, low cost investing options. The benefits to the small business are a lower interest rate, varying terms from regular loans and interest free tax benefits. It is not always as easy to find as a typical loan but is a great alternative for a small business.

Small Business Line of Credit

A small business can obtain a line of credit based on their past transactions and credit history. The business will be able to use funds as needed versus applying for a loan every time that they need a loan. The convenience of having a line of credit usually comes with a higher percentage rate, but it is easy to access money when your business needs it most. If you use the whole loan amount up front then the business is still able to access more funds as you pay the balance down. This is similar to revolving credit but without the typically high rates.

Small Business Term Loans

You can use a small business term loan when you are in need of capital or need to purchase equipment for your small business. The interest rates vary and you can get a variable or fixed rate loan. In some cases, you will not need to put up collateral but for most of these loans collateral will be needed. Keep these loans in mind when you might need to extend the loan terms to longer than average.

Commercial Real Estate Loans

If you are considering refinancing the current loan on your building or if you are purchasing a new space then real estate loans are also available for small businesses. The terms are shorter than a home mortgage and the rates are usually a bit higher. This loan is good for individual business owners who need to lower their payments or who need to own their building rather than lease a space.

These are four great options for small business loans. Certain lenders may have different options and some local banks cater to small businesses. In 2009 President Obama started to provide a stimulus package for small businesses that would help to keep the banks lending. They only have a certain amount of money to lend and the government was intending to help by opening up more funds for them to use locally. You will still need to qualify the same way you always have, there will just be a bit more to go around.