Running a small business is indeed a herculean task. Whether you want to have requisite money for buying new equipment or you want money for investing in inventory, it is quite likely that you may need more capital that you actually have in your bank account at some point of time in order to run your business successfully.
When you are in need of money but you do not have anything in your hand, then whom do you approach. It’s a viable question. Simply speaking, small businesses have multiple choices that they should explore for funding. Starting from SBA loans, hard money to conventional funds, options are limitless. Here are a few popular small business startup loans you should explore for your loan requirement.
Try out SBA loans
The Small Business Administration loans are designed to cater to the financial requirement of different types of businesses. However this organization does not lend money directly to the small businesses. All it does is to set up proper guidelines for these SBA loans that actually are made by its partners such as banks, community development agencies, and micro-lending organizations and so on. The best part is that this type of organization offers guarantee that allows bank or other lending organizations to extend the credit that it otherwise would have declined. Be it startup company with poor credit score or a company with fixed cash flow, anyone can get most out of this type of fund. Since this type of organization guarantees seventy five to ninety percent of the total amount of loan, the lenders get rid of all sorts of risks.
Two popular types of SBA loan that are available for the borrowers include SBA 7(a) loan and SBA 504 loan. In case of the first one, the loan size ranges between $125,000 to $ 10 million and the interest rate is fixed for all. For real estate the loan term is twenty years and for equipment, it is 10 years. In case of SBA 504 loan, minimum loan size is $50,000 and its maximum size is $ 5 million. Interest rate is mostly variable though there are a few fixed interest rates options.
Go for hard money loan
The lender of hard money in Texas uses this type of loan on the basis of property that you wish to purchase and not on the basis of credit score. The size of this type of loan is two hundred thousand dollars and more and it is used to purchase retail, land, multifamily, condominium and so on. The loan term is one to three years along with loan extension in some cases. The interest rate is only nine percent. Starting from restructuring, property improvement to acquisition, it is used for diverse purposes. The closing time period is only ten years.
Avail conventional loan
The loan size is two hundred thousand dollars or more and this type of loan is used for multifamily, land, storage, warehouse, hospitality and other purposes. The loan term is five to ten years and the interest rate is four percent which is either fixed or variable.
Choose one that fits your bill and utilize it for your requirement.