WHAT IS SMALL
SMALL BUSINESS
LENDING?
The question of "How do small business loans work" is the natural question when deciding on growth possibilities or starting a small business.
Small business loans allow existing or startup companies to borrow money from various lenders. Various loan types exist to help entrepreneurs meet different goals. The way each loan works depends on the type of loan.
Maybe you've come up with that product that has the market beat. Or, maybe you need a piece of equipment that would tip your business's growth over the top. Or, maybe outstanding invoices have you in need of funds for operating costs. Whatever it may be, it may be time for a loan.
EQUIPMENT
FINANCING
Equipment financing refers to a loan used to purchase business-related equipment. Instead of using your working capital to purchase the qualifying equipment, equipment financing allows you to finance the full equipment cost and repay the interest and principal over fixed terms. Once the payback period is complete, you will own the piece of equipment outright.
SBA
LOANS
A SBA 7(a) loan is the primary product from the SBA. It isn't a loan directly from the SBA, rather, the SBA helps small business owners secure loans by guaranteeing a portion of the amount borrowed, capping interest rates, and limiting fees. Generally qualified business owners can use a 7(a) for any business purpose.
AR
FINANCING
Accounts receivable financing uses your outstanding invoices as a form of collateral to help you obtain financing or an advance for your business. But unlike factoring, you do not sell your invoices to a third party. You will continue to remain responsible for collecting on your outstanding invoices while making payments towards your loan.
MERCHANT
CASH ADVANCE
A Merchant Cash Advance isn’t technically a loan, but rather a cash advance that is paid back by withdrawing a percentage of your credit sales, typically on a daily basis. Since a merchant cash advance is based on a certain percentage of the daily balance, the more credit card sales a business does the faster they are able to repay the advance. On the other hand, during times of slow business, the payback would be reflective of the incoming cash flow.
ASSET BASED
LOANS
An asset based loan is a loan that is secured by owned collateral. Typically, they may be secured by real estate, accounts receive, equipment or other property that may be owned by the business owner. This secures the loan for the lender, in cases where the borrower defaults on the loan, the lender has the right to obtain the asset.
FRANCHISE
FINANCING
When it comes to sources for financing a franchise there are many options available. Options include:
-
Franchisor financing
-
Traditional bank loans
-
SBA Loans
-
Alternative lenders
-
Family and friends
​
It’s best to consider all your options when looking to finance your franchise to see what products fit your business needs best, and we're here to guide you through that process.