Becoming an entrepreneur involves shouldering enormous responsibilities, especially in the initial two or three years of the business. It is the time when you will be looking for suitable debt financing. When it comes to financing, choosing from the best business loans available in the market can be an overwhelming task.
If you are looking at lower rates, loans by government institutions and banks offer a good choice. However, if you want the funds quickly, short-term and no hassle loans such as the merchant cash advance will be an apt choice for you. Here is a more detailed overview of the various loans available now, so you can decide on the ideal loan that meets your needs.
Read More: How to Get a Small Business Loan in 5 Steps
Line of credit
This is a loan type that most business owners choose as it helps to balance the cash flow and is of great help during emergencies. Such loans are apt for funding operating costs and meeting with business cycle requirements. However, these are not best business loans for purchase of property or equipment.
Since the loan is short term and carries low risk, the interest rates are low. Interest is paid on a monthly basis, while principal payment is done at your own convenience. You can also renew the loan after the term period ends on an additional annual fee.
Verification is done on your tax returns, financial statements and projected cash flow before the credit line is fixed. In some cases, banks may want you to pay the credit line fully for one week to 30 days every contract year. If your financials are satisfactory you can negotiate and get a better offer.
Long-term business loans
This is one of the best business loans offered by lenders. When you are looking to refinance, acquire property, expand your business or need working capital such loans are apt choices. The loans are paid monthly and are in large installments. The interest rates are lower when compared to the loans taken for a short term. If your business is already established, or if your growth plan is impressive, it is easy to get such loans.
Short-Term Business Loans
Unlike the loans are taken for a long-term, these short-term options require you to pay the loans during the term end. Since these are for a short span, the loans are taken for smaller fund needs like building inventory, accounts payable cash deficit and for small-scale projects with high yield potential.
The Merchant cash advance is one of the best business loans in this category. You can get the funds quickly and they are not dependent on credit making them the best small business loans for bad credit option. While cost is much high than conventional bank loans, there are no fixed repayment terms. Instead, the payments are taken from the daily operating account of the business based on the sales made via credit cards. Retailers and other seasonal businesses benefit largely by such loans.
There are other business loans like installment loans that require you to pay interest and principal in equal payments every month, balloon loans that require the payment of principal in full at the end of the loan term and secured loans. To choose best business loans for your business financing needs, it is vital to approach a service that offers you diverse choices from which you can select one that suits you best.