How Unsecured Company Loans Can Work for You

A term loan is a common corporate finance tool. You will obtain a lump sum of cash in advance, which you will ultimately compensate with interest for a set period of time. Online firms have up to $1 million in long-term investments that can be cheaper to borrow than small business financing banks.

Pros:

• Get cash in advance to invest in the business.
• Typically larger amounts of borrowing.
• Fast financing if you use an online lender rather than a traditional bank; typically a couple of days a week vs. a couple of months.

Cons:

• can require personal insurance or collateral—things such as real estate or company assets that may be sold by the investor if you default.
• Costs can vary; term loans from online lenders typically face higher costs than those of traditional banks.

Ideal for:

• a business that continues to expand.
• Borrowers who have a decent reputation and a solid business, and who don't want to wait a long time for their funding.

The Small Business Administration guarantees loans issued by banks and other lenders. Repayment periods for SBA loans differ on how you plan to use the capital. They vary from 7 years of working capital to 10 years of buying machinery and 25 years of acquisition of real estate.

Pros:

• some of the lowest selling costs.
• High debt is up to five million dollars.
• Long repayment terms.

Cons:

• Almost impossible to qualify for it.
• Long and systematic process of execution.

Ideal for:

• organizations that are seeking to expand or refinance new loans.
• Strong-credit holders who have a long time to wait on their funding.

A credit line gives access to funds up to the credit limit, and you pay interest only on the money you take out. It would have more flexibility than a term loan.

Pros:

• A versatile tool for borrowing.
• Typically unsecured, no collateral is required.

Cons:

• can bear added costs, such as maintenance fees and draw-up fees.
• High sales expectations and credit standards.

Ideal for:

• short-term borrowing, cash flow management, or unforeseen circumstances.
• Seasonal business

Equipment loans would help you buy equipment for your business, probably including heavy-duty vehicles. (Business auto loans for vehicles, vans, and light trucks are available.) Typically, the lease period of the machinery relates to the expected life of the machines and the equipment serves as a loan guarantee. Rates will depend on the value of the equipment and the activity of your business.

Pros:

• You own the machinery and you create equity in it.
• Whether you've got good credit and business financing, you'll get a fair pricing.

Cons:

• You will have to make a down payment.
• Equipment could become redundant earlier than the length of the funding.

Ideal for:

• a business that wants to own new equipment to make more money.