It takes a lot of work to start your business and even more effort to keep it running. Whether you are looking to expand your local business or build a startup for a great new idea, you will need to be prepared for the world of business loans.
When It’s Time For a Business Loan
Banks and financial institutions can lend to businesses for different reasons. Business owners commonly apply for loans when they are about to expand or start a new venture. Many business owners and entrepreneurs find that they need additional funding to take that next step before opening up another branch or offering a new service.
Types of Business Loans
There are various options for business loans, and each type of business loan offers different opportunities for the business owners. A common business loan type is the term loan, which offers money in a lump sum that can be repaid in payments over time. Term loans are usually offered in specific amounts, whether you need more or less to grow your business.
Credit unions and banks can also offer businesses a line of credit as a business loan option. The line of credit allows you to borrow as much or as little as you need. The line of credit option is great for business owners who need various amounts of funds over time instead of a single sum given at one time. Keep in mind that a line of credit may also mean a different style of repayment plan.
Another type of business loan that is available to businesses like retail business owners is the merchant cash advance. Merchant cash advances offer the lump sum in the same way a term loan does. The difference between merchant cash advances and term loans lies in paying off the loan. If you borrow using a merchant cash advance, your bank or credit union will receive a percentage of your earnings in credit card and debit card sales as a business to pay off the loan over time.
Loans for Small Businesses
Small business owners often have less options for their business loans, as many lenders will only lend to businesses that have been running for at least two years. Small business owners and entrepreneurs can find themselves in a predicament when it comes to business loans. Many borrowers look to alternative lenders who can offer loans without strict requirements to be eligible for a loan.
Alternative lenders for business loans can have downsides. Even though these types of lenders can offer cash quickly for smaller or newer businesses, the loans may have higher interest rates. These types of loans can also have harsher penalties for a late loan payment, so be sure to read your paperwork carefully before agreeing to a business loan from an alternative lender.
Business Loans at Great Basin Federal Credit Union
At Great Basin Federal Credit Union, we can offer business loans to startups and small businesses that may not have a chance elsewhere. As part of our commitment to the community, Great Basin Federal Credit Union consults with loan applicants to make sure you know how much you need and when as a business owner. We also offer small business seminars to continue empowering local business owners.Share: