December 4, 2013 Leave a comment
As any entrepreneur can attest, business income doesn’t always come in an orderly fashion. There will be times when huge amounts of money flow into the business, but then there will be times when revenue is so scarce that you’ll wonder why you went into the business in the first place. Or sometimes, an investment opportunity presents itself that you know could help you grow your business in the near future but then you are short on funds. For times like these, you (the entrepreneur) might want to consider getting a loan to help you through the lean periods or to help you grab a business opportunity.
You have several options if you want to get a business loan, let’s look at some of the options that are available to most entrepreneurs that run small to medium-sized business.
Banks are one of the primary funding sources for businesses. You can get a line of credit that can help you meet short-term working capital needs from your bank. Banks may also offer accounts receivable loan that can allow you to pay off operating expenses if your money is tied up in checks that have yet to arrive or have yet to clear. Banks can also provide you with equipment and vehicle loans that can be used to buy computers, heavy equipment, and vehicles for your business such as trucks, vans or corporate cars. Banks also offer real estate loans that you can use to buy property, office space or to make refinements on purchased property. Banks can provide you with these commercial loans without any need for you to give them collateral and these are considered unsecured loans. Some banks on the other hand, may require that you submit some form of collateral before they provide you with a loan, especially for higher loan amounts.
Credit Unions are another source of funds for your business. You need to be a member of a credit union to avail of their services but they have many financial services that can be useful to entrepreneurs such as yourself. Many of the services provided by credit unions are similar to what banks offer, including savings and loans. Compared to banks though, many credit unions operate as “non-profit” entities. This means they have a greater focus on serving their members than making a profit so you may find it easier to get a loan for your business from a credit union than from a bank.
Small Business Administration Loans
The Small Business Administration (SBA) has many programs to help small to medium-sized businesses. They have many programs that you might want to take advantage of if you need a loan. One of their most common loan programs is their 7(a) Loan Program. This program is open to small businesses that can demonstrate the need for loan proceeds. The agency also has a microloan program that can lend up to $50,000 to a small business and can be used as a working capital. The SBA also has a real estate & equipment loan program if you’re looking to apply for something like that.
A credit card can be a source of funding for your business. Some businesses have business credit cards while you can also tap into your own personal credit card. A credit card can be used to pay for equipment for your business. It serves as a small loan facility for your business although you have to weigh this option carefully as the fees and interest rates might make it one of the more costly funding sources for your business. You have to make sure that whatever you purchase on the card will bring in profits that are greater than the fees generated by using the credit card.
Businesses will always encounter money flow problems. Entrepreneurs may not always have enough funds stashed away to get through the lean times or to grab a business opportunity. A loan becomes a very useful tool in times like these. Banks, credit unions, the SBA, and even the credit card in your wallet are some of the sources you can tap into if you need a loan for your business.
About the author:
This article is prepared by Compare Hero for How To OverCome Debt. Compare Hero is Malaysia’s leading financial comparison website. Compare a broad range of financial products – from credit cards to insurance and personal loan plans.