Business loans can be defined as money lent for a
specified amount of time at a specific interest rate to a
specific person or people that operate a business or plan
to operate a business. This definition is very broad, but
so are the various types of loans available to business
people. Deciding on which type of business loan that you
and your company will benefit from the most is very
important. Often times, a start-up business or someone
that has never owned a business will find themselves more
or less applying for a “personal” loan. This can be a very
risky endeavor, mixing business loans with personal loans,
however, often times it is the only available means for
first time business owners.
One of the first things personal business owners need
to do is establish business credit. Business credit can
help you get a business only loan without using your
personal credit. Establishing business credit can be done
by:
1.) Opening up a business credit card account and
paying it in full.
2.) Buying equipment and supplies from companies that
will report good standing to the business credit bureaus.
3.) Having a good business plan with potential
earnings, letters of intent, and any type of customer
contracts already laid out.
All of these types of endeavors can help in receiving a
business loan. Often times, financial institutions require
in-depth business plans, be prepared to spend days working
on just the certification paperwork prior to applying for
a business loan. A business only loan can be obtained in
the business name without use of personal credit as long
as the business can justify the loan amount and the
ability to pay it back.
There are several different types of business loans
available, ranging from those secured with collateral,
non-secure loans, which are based upon the credit
worthiness of the applicant, and even government loans for
small business ventures, women and minorities. Government
loans are those loans secured by the government; in most
instances these loans are available when the business or
owner can prove that the community will prosper based upon
the business at hand. For the most part, government loans
are based upon personal credit.
The basis for which you may need or require a business
loan may vary. Some of the most common business loans
available to business owners are:
Acquisitions or a loan to acquire an existing
business
Inventory loans
Account Receivable Loans
Working Capital Loans which converts a companies
assets into working capital
Equipment Leasing
Commercial Property loans
Warehouse financing
International business loans
Franchise loans
One of the most important tools when deciding on what
type of business loan your company needs is research.
Researching the different types of loans available to you
and your company can save you money. First, look into the
different type of business loans available to you in your
state. Many states have government loans available; some
even offer grants, which is money available for specific
purposes that do not require repayment. Research the
different type of Federal loans available. You can do this
at the following website: www.sba.gov. Call your local
bank and investment companies regarding the business loans
they have available for you. Many times, business loans
are not that hard to acquire. With research and a good
business plan, your dreams may come true.
