What are business loans?
Business loans can be defined as money lent for a specified
amount of time at a specific interest rate to a specific person
or people that operate a business or plan to operate a business.
This definition is very broad, but so are the various types of
loans available to business people. Deciding on which type of
business loan that you and your company will benefit from the
most is very important. Often times, a start-up business or
someone that has never owned a business will find themselves
more or less applying for a "personal" loan. This can be a very
risky endeavor, mixing business loans with personal loans,
however, often times it is the only available means for first
time business owners.
One of the first things personal business owners need to do is
establish business credit. Business credit can help you get a
business only loan without using your personal credit.
Establishing business credit can be done by:
1.) Opening up a business credit card account and paying it in
full.
2.) Buying equipment and supplies from companies that will
report good standing to the business credit bureaus.
3.) Having a good business plan with potential earnings, letters
of intent, and any type of customer contracts already laid out.
All of these types of endeavors can help in receiving a business
loan. Often times, financial institutions require in-depth
business plans, be prepared to spend days working on just the
certification paperwork prior to applying for a business loan. A
business only loan can be obtained in the business name without
use of personal credit as long as the business can justify the
loan amount and the ability to pay it back.
There are several different types of business loans available,
ranging from those secured with collateral, non-secure loans,
which are based upon the credit worthiness of the applicant, and
even government loans for small business ventures, women and
minorities. Government loans are those loans secured by the
government; in most instances these loans are available when the
business or owner can prove that the community will prosper
based upon the business at hand. For the most part, government
loans are based upon personal credit.
The basis for which you may need or require a business loan may
vary. Some of the most common business loans available to
business owners are:
-Acquisitions or a loan to acquire an existing business
-Inventory loans -Account Receivable Loans -Working Capital
Loans which converts a companies assets into working capital
-Equipment Leasing -Commercial Property loans -Warehouse
financing -International business loans -Franchise loans
One of the most important tools when deciding on what type of
business loan your company needs is research. Researching the
different types of loans available to you and your company can
save you money. First, look into the different type of business
loans available to you in your state. Many states have
government loans available; some even offer grants, which is
money available for specific purposes that do not require
repayment. Research the different type of Federal loans
available. You can do this at the following website:
www.sba.gov. Call your local bank and investment companies
regarding the business loans they have available for you. Many
times, business loans are not that hard to acquire. With
research and a good business plan, your dreams may come true.