What Types of Small Business Loans Are Available?

When it comes to financing a small business, there are a variety of loan options available. While installment loans are the most common, there are also revolving loans in the form of lines of credit and short-term loans, such as microloans. Depending on the terms of the agreement, small business loans can be either installment or revolving. A term loan is a type of installment loan.

When you apply for an installment loan, you'll receive the full amount of the loan up front and then repay it over a predetermined period. Additionally, if you have a fixed rate loan, each payment will be for the same amount. On the other hand, revolving loans offer lower amounts of money and shorter repayment periods. This means you can get a small amount of money, but you'll have to pay it back quickly compared to other loans.

SBA 7 (a) loans are installment loans, while commercial lines of credit are revolving. Equipment loans and microloans come in both varieties. Installment loans are a great option for small businesses because they provide a quick and temporary increase in cash. If you're looking to buy expensive property, equipment, or other items, there are several installment loans that can be used for this purpose.

Student loans are also included in an installment loan because they are expected to be repaid within 10 to 12 years. Installment loans are also a better option for debt consolidation, commercial real estate purchases, and working capital. The line of credit, depending on the terms of the line of credit, can be similar to a term loan since you may have to repay each drawing for a specific period of time. Payday loans are often used to cover emergency expenses due to their high rates and short repayment period.

Within the small business arena, understanding financing options, cash flow management, business credit and taxes is essential. A commercial installment loan is a loan that is repaid periodically for a certain amount of time, such as six or 12 months, with interest. If your business is more used to breaking even than making a profit, then an installment loan may be preferable. A revolving loan is a credit agreement in which the borrower can withdraw money as needed up to a pre-established limit and then repay the lender a portion of the balance at regular intervals. It's important for business owners to understand their financing options when it comes to small business loans.

Reviewing the credit terms of your loan offer will help you determine if you are being offered an installment loan or a revolving credit. You may also worry about qualifying for such loans, having to go through a tedious application process, or waiting forever to receive funding.