SMBs (Small and Medium Businesses) form an important part of our economy, providing many job opportunities across our community their success is integral to the ongoing prosperity of our country, but running a small business does come with its own set of challenges.
Whether it’s seasonal fluctuations, a lack of cash flow, or faulty equipment that needs replacement, small business loans can provide SMBs with the safety net they need to flourish. But what type of small business loan is right for you? And how can you gain quick and easy access to your required funds?
There are various business expenses where a small business loan can be used:
- Maintain Inventory
- Business daily expenses
- Additional staff
- Paying employee wages
- New product development
- Marketing and promotions
Keep reading to find out everything you need to know about loans for your small business.
Types of small business loan?
Small business loan function like many other business loans – a lender provides a sum of money which is paid back over time. The loan may be secured or unsecured and there are usually fees or other costs as well as an interest charge. There are different types of small business loan:
Secured business loan
With secured business loans, the borrower provides collateral, (real estate, vehicles, machinery, etc) to protect the lender from loss. Best suited to mature businesses that own hard assets, these types of loans are considered less risky, tend to be larger, and are often cheaper than unsecured loans.
Unsecured business loan
With unsecured business loans, the borrower provides no collateral, so the lender carries more risk. This means the loan is usually smaller and more expensive in terms of fees and interest. To obtain unsecured loans borrowers will typically need good to excellent credit references.
Merchant cash advance
A merchant cash advance (MCA) provides funding for businesses that receive payment via a credit card terminal. This type of loan is ideal for businesses with less than reasonable credit.
The lender provides a lump sum that’s repaid from customer card receipts. MCA loans are flexible, can be set up quickly and they provide scalable funding – as your card receipts grow, so does your ability to borrow.
Every small business loan is specific to the borrower’s business and the circumstances it is operating in. No two loans are alike. If one type of loan is not available for you, there may always be a different option that delivers what you need. Contact Opalescent Funding today to start discovering your options.