Monday, August 13, 2007

Types of Loans for Small Business

Hi, being a financial advisor I am commonly flooded with the enquiries regarding financial backing process, particularly for small businesses. I am surprised by the lack of consciousness in most of the people making researches; mind you some of them are very successful at what they are doing.

It appears there is some kind of uneasiness amongst the small business owners who are searching either working capital loans or capital loans. May be it is those power suits………

No matter………….The procedure is very smooth, provided you are well prepared and well informed. Through this blog, I will talk about different aspects of procedure involved in small business funding .

To begin with, let’s talk about the types of loan and funding options available:

Long Term loans are the most common loans. They are mainly used as a capital funding source. Refund is monthly over a term in agreement.

Short term loans are for both capital and working capital funding source, and are to be refund in one year or less in a lump sum at the end of the term, rather of monthly.

Loan against equipments is more easygoing to secure. The equipments purchased through with funds are the direct collateral for the loan. Used for capital disbursals only.

Credit lines are mostly for working capital financial support. Alternatively of allowing the full amount of loan, a certain amount per year is loaned.

One great option is other than going for loans from banks and financial institutions: availing business cash advance.

The cash advance is to be refunded from the credit card sales that the business does in a particular time period, commonly through automatic debit. Organizations like Merchantcashdirect provide such cash advance.

In my next posting I will discuss the financial institutions providing loans, and essentials of a good loan application.


Anonymous said...

Hmm… I'll have to keep this post in mind because I want to run my own business soon. I have a good amount of money saved, but I know I'll have to take out a loan at some point. I can use all the advice I can get. Lately I've been thinking about buying a business instead of starting one from scratch. Any suggestions? Advice? Thanks.

Anonymous said...

Jon --

I suggest checking out some other online websites. There's one called, which is an online global marketplace where you can buy or sell a business. You can also use it to find a lender, broker, accountant, etc. It's a good place for entrepreneurs to find businesses and resources.

Then there are always local small business groups, like the Chamber of Commerce, which can also be very helpful.

Good luck!