The Many Types of Small Business Loans

If you are a small business owner, you might likely require a loan at some point or the other to keep your company afloat. In an uncertain economy, a cash crunch can take the wind out of your sails, and if things get dire, it could even cause you to consider shuttering your business. It does not have to be that way, though. Fortunately, business owners seeking small business loans in Charlotte NC have plenty of financing options.

Many types of small business loans

If you are seeking small business loans in Charlotte NC, you can consider the following options:

Term loans

When you take a term loan, the lender will extend a specified amount upfront to you for a short-term, middle-term, or long-term duration. There will be a set loan repayment schedule for the relevant period, and you will have to repay it with the predetermined interest. Please note that the interest rates may be higher than what banks charge for traditional loans.

The benefit of term loans is that the lender can approve the funding within a day. To qualify for this loan, you must provide security collateral. It is also essential to have a FICO credit score of 500 or more, have a business that has been in operation for more than six months, and have average monthly bank deposits of over $15,000.

Small business administration loans

You can get these small business loans in Charlotte NC from private lenders and have them guaranteed up to 80% by the small business administration. Depending on if you are taking working capital loans or real estate loans, the repayment schedule may vary from seven years or up to 25 years, respectively. Along with longer repayment schedules, the loans may have lower interest rates. And you can get financing up to $5 million. It seems like a good deal if you can meet the eligibility conditions.

You must be a US citizen or have a legal permanent residence status and have been in business for at least two years. Additionally, it is necessary to have a credit score of at least 620, no outstanding taxes, and no bankruptcies and foreclosures in the past three years. The application process for SBA loans can be lengthy.

Business lines of credit

You can get this loan to pay for the short-term operating expenses of your business. Along with being more flexible than a short-term small business loan, it does not require you to put up collateral to get the funding. You have to pay interest on the borrowed amount and there may be maintenance and draw fees. To be eligible for this loan, you must have a business based in the United States and have operated it for at least six months. You also must make at least $50,000 in annual revenue and possess a credit score of at least 560.

Equipment financing loans

You can get these loans to buy heavy machinery and other equipment that you need for your business operations. The equipment will serve as collateral for the loan. Since equipment tends to depreciate over time, the loan repayment schedule is likely to be shorter than the equipment lifecycle. To qualify for this loan, you must have good credit and ready cash to make a down payment of at least 20% on the equipment.

You will also need to be an established business with a proven steady revenue stream. The lender may offer lower interest rates and monthly payments for people with good credit.

Business credit cards

Businesses often fail because they cannot afford to pay the expenses of their daily operations. With business credit cards, you may be able to get some necessary breathing room until you can make other financing arrangements. You do not need to put up collateral with business credit cards, but you may have to link your account to the credit card account. The cards may have higher interest rates as compared to regular business loans. You may also have to pay the annual fees on the cards. To be eligible for the business credit card, you require a credit score of at least 670 and should provide bank statements and other relevant financial documents.