A Discussion on Small Business Loan Types

A Discussion on Small Business Loan Types

If you are looking for a loan for your small business you may realize that there are several types of loans available to you. So what are the small business loan types? The first of these types is a business cash advance the second is a business line of credit and finally the third is a business loan. These are all various ways to borrow money for your business operations or new business projects, but there are also differences between them. We will discuss the nuances of these three types below.

The first of the small business loan types is the business cash advance. A business cash advance works very much like a loan only it typically have much less strict requirements for approval, as such they have a much faster approval time. But, since they are so much easier to get, the odds that they will not be repaid in full and on time also increases, because of this they tend to have much higher interest rates. They are designed for short-term need for companies that simply don't have the cash flow for an emergency. They should not be used for any type of long-term problem and if you need to have a larger loan then you should seek out a more traditional loan or seek out venture capital.

A business line of credit is the second of the small business loan types. These function more like credit cards than loans in that there is an amount which is available to you but not immediately disbursed. So if you were to get a line of credit for say $3000 you have $3000 available to borrow at any time. Also if you do use the line of credit and then subsequently pay back the amount which you have borrowed that amount is available to you again. In our $3,000 line of credit example, if you were to use $1,500 and then subsequently pay back all $1,500 + interest, you would then have $3,000 available to you again.

Finally there is the traditional loan to round out our list of small business loan types. Typically this will come in the form of an installment loan which is dispersed all at once at the time of approval and must be paid back in monthly payments. Installment loans are typically structured so that all monthly payments are the same, with the first monthly payment having the highest ratio of interest and the last payment have the lowest

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