There are many different types of small business loans, and it can be difficult to determine which one is right for you. Before you even begin to determine that however, you have to know what each kind is and how they are different from each other. There are truly too many different types to name, but following are some of the more common types of small business financing.
Traditional (Secured vs. Unsecured)
Traditional small business loans are the most common type. This is the type of loan for which you simply fill out an application and wait. If you have collateral, you can get a secured loan. If not, you may be able to get a loan that is unsecured. Most often your credit score and income, or that of the business, play heavily into the lender’s decision, and a secured loan will generally have better terms and rates than an unsecured loan due to the reduced risk the security offers.
There are a couple of different types of these. Most commonly they are known as the small business line of credit and the business credit card. They are generally the same but the details can be significantly different. A line of credit may have a more stringent application process, but once you have it the funds are just as easy to access and the rates and terms are usually much better than a credit card. A credit card is usually a little less trouble to get, with many getting preapproved offers in the mail, but the interest rate can be huge, sometimes as high as 27% or more. These loans can be spent like cash, with payments being made regularly on what has been used.
Loans Against Assets
Of course traditional secured loans can be taken against assets, but there are loans that are taken against specific types of assets such as loans against luxury assets and loans against receivables. Loans against receivables can also be called factoring receivables. There is a lot of variation in how these loans work, rates, and terms, but they are another option if one is needed.
Biz2credit has a network of over 1,300 lenders that offer all types of financing. Whether you need loans against luxury assets or a vanilla secured business loan, we can help. Visit Biz2Credit today for more information.