Perhaps at one time, if you wanted to start your business or grow an existing business, your only option was traditional start-up loans or expansion loans. This is no longer the case. If you are considering small business lending, and traditional loans are not going to work, you do not necessarily have to wait until they will. There are other options.
Unsecured Business Loans
These loans do not required security, also known as collateral. If you do not have assets available for collateral, these could be an option. They work much the same as traditional loans, only they often have higher interest rates, less favorable terms, and a lower limit on the amount that can be borrowed. These are all risk-mitigation factors for the lender since there is nothing securing the loan in case of default. However, the money can be used the same way as funds from traditional loans, meaning this type of loan can still help you accomplish your goals. The decision will have to be an individual one based on cost versus benefit.
There are several different versions of assets-based funding. The most common include receivables factoring and a merchant cash advance. Both carry higher interest rates than traditional lending options, but the repayment terms are often easier to swallow, and funds are usually available in as little as 48 hours. The amount that can be borrowed is based on the amount of the assets, meaning the factoring is based on the amount of receivables you have. A merchant cash advance is based on average sales. The flexibility on repayment could also be a plus. Daily, weekly, and monthly options are often available with repayment being a percentage of daily, weekly, or monthly sales.
Small business credit cards are popular and can provide flexibility and rewards. Additionally, a Small Business Administration Community Express Loan might be available. Backed by the SBA and offered through community banks and credit unions, they can range from $500 to $500,000.
When the time comes to figure out what kind of financing you need, and what options are available, Biz2Credit can do much of the work for you. Head over to Biz2Credit to answer a few simple questions, and we will match you with lenders from our extensive network that offer exactly the right financing options for you.