Doing business in today’s competitive markets is difficult enough as it is and the truth is that this would be even harder for most people if they were forced to get their own funding. When it comes to types of loans for small businesses there are several different types that are available in the United States, although the terms and the conditions can vary wildly based on a variety of factors including (but not limited to) business size, credit score, credit history, and more.
While this will not be a fully complete list, most business loans will fall under one of these general categories and it does give you a really good idea of what is available for entrepreneurs and other business owners out there.
Secured Business Loans
This is probably the most common type of loans for business given out in the United States. A secured business loan is one where certain equipment, assets, or other tangible items with value are put up as collateral against the amount of the loan. In the event payments can be made or the company falls too far behind, the bank then has the legal right to seize those assets and sell them off to recoup the loss.
Often times this is more than a general “forced into bankruptcy if can’t pay” type of scenario and actually includes listed assets that have a very solid and tangible value as they are.
The secured business loan is especially common for businesses with fair or poor credit in addition to smaller businesses that have a lot of their value in equipment, property, or inventory.
Unsecured Business Loans
An unsecured business loan is just that: a loan that a business is legally responsible for paying back but there is no specific equipment, property, or asset put up as collateral. The business has enough of a credit score or enough of a history that they are able to get more favorable terms.
These are common loans for larger businesses or ones that have been around a long time and have the trust and track record to get that loan. This is also a possibility for a business that has far more funds than what they are borrowing, but is simply looking for more cash flow. These creates its own sort of safety net.
The Small Business Administration (SBA) is a government organization that is setup to help small businesses, especially during recovery times when they are trying to help businesses in areas that were affected by natural disasters get back on their feet and aid with the local recovery.
SBA loans are given out by the government and have very specific repayment terms but they are a viable option in many situations where there don’t seem to be a lot of other choices.
As you can see, there are many viable options when it comes to getting a in America. Credit scores matter, relationships matter, but the funding is out there in the right circumstances.