Types of Loans for entrepreneurs
If you are an entrepreneur looking for loans, you have options. You can get an SBA loan, term loan, line of credit, credit card, cash advances and many other alternative means for funding.
Here are a few loans that you can learn more about on the site:
SBA Loan : The Small Business Administration (SBA) is a government run agency that provides entrepreneurs and small businesses access to loans necessary to start up or keep going. These loans are distributed through banks, credit unions, and other approved lenders. The SBA has different programs catering to different business types. The 7(a) loan guarantee program is geared more toward entrepreneurs and small businesses. The 504/CDC program is for companies that need a loan to build or buy real estate. Lastly, the SBA also provides microloans, which are small loans that help provide for immediate needs a company may have. The SBA also offers other programs that are for minorities and women.
Term Loans: These loans are provided through banks or credit unions. There are three term loans: long-term, intermediate-term, and short-term loans. Each of the loans varies in length. The long-term loan’s length is any where from 3 to 10 years and sometimes longer. The intermediate-term loan’s length is about 1 to 3 years. The short-term loan is usually a loan that is less than a year. Depending on what your company needs will determine what loan you will want to apply for.
Line of Credit: This is used for companies who may have seasonal change. A line of credit is an approved loan amount that can be used at any point. Interest is charged only when the money is used.
Cash Advance: Companies may decide that they need cash quickly. They can do this by going to an ATM with their credit card and pulling out money. Since credit cards have credit limits, the business cannot exceed the credit limit amount.
Credit Card: Entrepreneurs can use a credit card as a type of a loan, but this is not recommended. Essentially a credit card is an approved amount of money that you can chose to spend at any given point. This can be used for smaller day to day purchases, but it all depends on what the company chooses to use it for.
Small Business Innovation Research Program (SBIR): This program is not a loan program, but it is an alternative for funding. It is for entrepreneurial high-tech companies who are trying to compete for federal research and development awards. In order to qualify to be awarded SBIR funds certain requirements must be fulfilled.
Other alternative funding for entrepreneurs includes Angel Investors, Venture Capitalists, Peer-to-Peer Lending, and more.
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