When it comes to types of fast business loans, entrepreneurs or small business owners are often spoiled for choice. As a borrower, your options in terms of business finances are many. This wide variety of business loan alternatives is good as it implies a credit facility for every financial requirement your organization faces. For example, if you want to purchase new equipment for your business, you can apply for an equipment loan.
On the other hand, if you want a higher loan amount to finance an expansion project, it makes more sense to consider bridging loans or secured loans. The bottom line is the best type of loan depends on why and when you need the capital. Again, some loan options, like short-term business loans, take less time to process, making them beneficial for business owners when they need urgent cash for their company.
But whatever the case, as a borrower, you must know different fast business loans to consider while starting your own business. To help you with this, here are some business loans and how they can help your venture in various scenarios.
Short-Term Business Loans
Short-term business loans are beneficial for resolving many financial issues of your business. Whether you need to recruit new staff, purchase or repair business equipment, or meet emergency expenses, a short-term loan can be a handy source of funds. The best thing about this loan type is that the eligibility requirements are lenient, and you can get the loan even with bad credit. Aside from this, unlike bridging loans or others, this type of business finance is often approved the fastest, and you can apply online from anywhere. Once the lender approves your loan application, you can get the money within 24 hours. There are different types of short term loans. They are as follows-
- Secured short-term loans
- Unsecured short-term loans
- Invoice finance
- Fixed interest rate short-term loan
- Loan terms up to 6 months
- Loans are processed quickly
- The simple and streamlined loan application process
- Easier to qualify
- Competitive interest rate
Equipment financing provides businesses with repayable cash for buying machinery, equipment, and other tools that a company requires to operate. As a borrower, you can use this type of loan to purchase POS programs and accounting software. The term of an equipment loan usually matches the life of the equipment. The equipment you will buy acts as a loan asset or collateral. Qualifying for this kind of loan is not difficult either, as private business lenders approve your loan if you have a satisfactory credit score. Like short-term loans, an equipment financing loan can take 24 hours to complete. So, it is faster to get.
- You can own the equipment outright
- You do not need to submit additional asset
- Enhance business productivity
- Simple eligibility criteria
Second Mortgage Loans
A second mortgage is funding applied against a property with a home loan. In other words, when you take out this kind of finance, the business lender places a second mortgage behind your current first mortgage loan. When you take out a second mortgage loan, the mortgage remains against your property you have paid off the business loan. Unlike other types of loans, you can use the money obtained from a second mortgage for any business purpose. This type of funding also provides competitive interest rates than many other loan types.
- Offer a higher loan amount
- Favourable interest rates
- Some tax benefits
Asset Finance Loans
Asset financing is a type of loan related to the organization’s assets. In this finance type, you can use your accounts receivable, existing inventory, or short-term investments to secure money. There are several reasons to take out this business loan, such as opportunity costs or tax implications. However, most borrowers opt for this due to poor cash flow. Besides this, as a borrower, you must know different types of asset finance loans. So, check out the various assets that you can use to secure asset financing from various lenders in the market-
Bridging financing is a type of short-term business finance often used to fund for some time whilst allowing borrowers to either refinance to longer-term debt or sell a property. The lenders offer this business loan for between 1-12 months, repayable in full at the end of the term. The loan application procedure is much simpler than many other funding types. You can complete the application process within 1 – 2 days. There are two types of bridging finance available. One is capitalized bridging finance, and the other is interest-only bridging finance.
- It is a fast business loan type
- You can choose to pay only the interest rate and principal amount later
- You do not have to make EMIs for capitalized bridging finance
Unsecured Business Loans
An unsecured business loan is a funding type given with no collateral. Here, the lender or bank relies on the borrower’s creditworthiness and repayment capacity. But if you cannot prove your creditworthiness, the bank or lender may require security to approve the loan.
- The simple loan application process
- Flexible usage of funds
- Minimum qualification criteria
Wrapping It Up
So, these are some of the business loan options to consider while starting your own business. As you can understand, you must opt for one depending on why and when you need the money. Besides this, you should also select the best business lenders who offer flexible loan terms and conditions. In this way, you can get the best and most cost-effective loan and start your dream venture efficiently.