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3 ways to get a loan for your small business

10/01/2018 18:10

Running a business isn’t easy. You need a lot of resources to keep it going and money is one of the primary resources your business needs. There are several ways to get a loan for your business whenever you’re short of liquid cash. I’ll share three most effective and quickest ways to get funds for your business.

 

1. SBA small business loan

Your best bet is to look for small business loans offered by banks that are backed by Small Business Administration (SBA). These loans have a fairly low-interest-rate and the terms and conditions are quite favorable. You can get as much as $5 million for your business under this category. Since these loans are backed by SBA so you don’t have to worry much but it doesn’t mean you don’t have to do your homework.

You still have to compare different loans, banks, check and compare business loan rates, and look for requirements. Getting a loan that’s backed by SBA is time-consuming and challenging for two main reasons. First, the competition is fierce. You’re not the only smart business around that is interested in SBA backed business loan. Second, requirements and eligibility criterion are tough. This is just to ensure that most suitable applications are entertained so prepare yourself for some real paperwork.

Let me tell you one thing: There isn’t anything better than SBA small business loan for your business.

 

2. Term loan

A term loan is a suitable option for your business if you’re looking for a fixed amount that you think your business can repay in a certain period of time (6 months). For instance, you’re expanding your business and opening a new office in another city. You need $800K for it and you’re short of $300K. You can apply for a term loan for $300K for a period of a year or more depending on when you can repay it.

A term loan is best for onetime expense as it provides your business with liquid cash that you can use easily. Term loans have variable terms and interest rates. It all comes down to what the borrower and lender agree onto.

 

3. Small business line of credit

If you don’t have a line of credit with a lender, you should get it. A small business line of credit gives you access to funds as needed. You can get up to $100K under a line of credit and you don’t get charged any interest if you don’t draw funds. It acts as a contingency funding source. When you need instant funds, you can draw from your line of credit, repay it and move on.

It is more like a credit card for your small business. It is handy and a must-have as it acts as an instant source of funds for your business whenever needed.

 

Final thoughts

Getting a loan for your business isn’t a big deal, there are several options to choose from. You should act smart by analyzing and evaluating all the possible options and choose one (or more) that best suits your business goals.

 

 

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