What Type of Business Loan Is Right For You?

Loans play an enormous role in the ongoing success of America’s small businesses, and America’s small businesses play an enormous role in the ongoing success of the U.S. economy. Since 1965, 65% of all new jobs created in the U.S. have come from small businesses. A quarter of those businesses even manage to stay open for at least 15 years, even though more than half are home-based. Loans are major contributors to the success of those businesses, 800,000 of which were granted financing in 2011 (and 600,000 of which were denied).

There are many types of business loans, each designed to provide assistance in a different way. From small business loans to business capital loans, let us walk you through them.

Small Business Loans

What are they?: Government-backed loans available from private sector lenders for small business owners.
What are interest rates like?: Between 5.8% and 8.5%
How long does the funding last?: Anywhere from one to six months
What’s the payback period?: Anywhere from five to 20 years.
Secured or nonsecured?: Secured

Merchant Cash Advances

What are they?: Advances paid back through regular withdrawal from monthly credit card sales.
What are interest rates like?: Between 18% and 22%
How long does the funding last?: Less than a month
What’s the payback period?: As long as it takes you to repay
Secured or nonsecured?: Secured

Startup Busines Loans

What are they?: Loans from private lenders to new business owners
What are interest rates like?: Between 5% and 7.5%
How long does the funding last?: Anywhere from one to five months
What’s the payback period?: Five years
Secured or nonsecured?: Secured

Business Acquisition Loans

What are they?: Loans to help borrowers acquire existing businesses
What are interest rates like?: Between 4.75% and 7.5%
How long does the funding last?: Anywhere from one to nine months
Secured or nonsecured?: Secured

Credit Lines

What are they?: Pre-arranged amounts of credit based on existing inventory
What are interest rates like?: Between 5% and 24%
How long does the funding last?: One or two months
Secured or nonsecured?: Either

Professional Loans

What are they?: Available to doctors, dentists, lawyers, and other professionals
What are interest rates like?: Between 5% and 10%
How long does the funding last?: From two to six months
Secured or nonsecured?: Either

Equipment Loans

What are they?: Loans for purchase of equipment with the equipment used as collateral
What are interest rates like?: Between 8% and 25%
How long does the funding last?: Anywhere from one to three months
Secured or nonsecured?: Secured

Business Capital Loans

What are they?: Designed to finance day-to-day operation of a business
What are interest rates like?: Between 3% and 7%
How long does the funding last?: Anywhere from one to three months
Secured or nonsecured?: Either

Whether it’s business capital loans equipment loans, or any other type of loan, there’s one out there for your business. A lender can help you determine what’s best for you. See this link for more.