Types of Business Loans
During running your own business, there are times when you will want to take out a loan. According to Rehayem, 2019 at g2 (learn.g2.com), business loans are agreements made between business owners and banks or private lenders for lending, and return it back as agreed. There are different types of business loans, such as: term loans, SBA loans, fixed-asset loans, bank line of credit and other.
Term loans are typically thought as a loan. “Term” here means the length of time between when the loan is sent and return of the loan. The length of time refers to the borrower, can be a year to more than a year. The lender will set the term for the borrower with the status of the borrower’s business and his credit quality.
SBA (Small Business Administration) loans are loans that are not issued to small businesses, but the owner of the small business must pay back a portion of a bank loan taken. This loan is a government’s way to solve small business problems in the form of an SBA 504 Loan.
Fixed-asset loans are loans that are secured, means that the borrower promised to make the asset a collateral, like a reassurance to the lender. If the borrower doesn’t pay back the loan and interest, the lender has the right to claim the asset.
Bank line of credit is a similar form of debt financing. It functions like a credit card for business, but no card included. The money is only used whenever needed by the company, so no risk of borrowing too much or not being able to pay the interest.
Other than that, there are many lenders that offer lower rates to non-profits for a goodwill. Startups and small businesses can use loan organization software to assist finding loans for their needs.
source: What Are Business Loans? (+ Which Type Is Right for Your Business?), by Maddie Rehayem, 30 April 2019.