8 Business Loans Options for Small Businesses
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Business owners often need money to start or grow their business. Whether you’re looking for a loan to buy equipment, hire employees, or expand into new markets, there are several options available.
Private Equity Investments
Private equity investments are an alternative source of capital for small businesses. These funds invest in companies with strong management teams and solid financial records. They also provide entrepreneurs with access to additional funding when needed.
Merchant Cash Advance
A merchant cash advance loan is a short-term financing option for small businesses. It allows business owners to borrow money against future credit card sales. This type of loan has become popular among small businesses because it provides immediate access to capital while allowing them to continue operating during the repayment period.
Working Capital Loans
Merchant cash advances are also known as factoring. Factoring companies purchase accounts receivable at a discount, typically 50% to 70%, and then collect payments from customers when invoices are presented. In exchange for providing working capital, factoring companies charge interest rates ranging from 1% to 5%.
If you own a business with less than $150,000 in annual revenue, you might qualify for an SBA loan. This type of loan is designed specifically for small businesses. It allows you to borrow up to $2 million without having to pay back any money until you start generating income.
Lines of Credit
A line of credit is similar to a revolving account where you make payments each month. You can use a line of credit to buy inventory, equipment, or other assets. However, unlike a revolving account, you do not need to repay the entire balance at once. Instead, you only need to repay what you owe when you make your next payment.