by TL Kleban
The idea of owning your own business is everybody’s dream. Who wouldn’t want to be their own boss? Owning your business frees you from the shackles of working for someone else and also gives you that business freedom you’ve always craved. The only problem, many people give up that dream quickly when they realize the amount of effort and money it takes to start that dream.
Most entrepreneurs and people looking to start up their very own business will need to borrow money at some point or other. It’s just the nature of starting a business. There is positive news, however, and that is the amount of different ways to find that money. The most common being business loans. Here are five of the more common business loans available to new entrepreneurs:
- Term loans - These are the most common general purpose loan. Businesses use term loans as a source of working capital, expansion, refinancing, and acquisitions. As a business owner, you then need to repay these loans monthly over the lifespan of the assets you’re purchasing. You’ll find these loans are common for larger amounts of investments.
- Equipment financing - You’ll find that financing your equipment is easier to obtain then a general line of credit. This is because the equipment you own acts as direct collateral for the loan. Financing equipment is also much less risky than a loan since your entire business isn’t at stake if you are unable to make your payments. The only thing you risk losing is your equipment. Often times, equipment financing can cover huge expenses into the millions of dollars for many larger companies.
- Credit card advances - Credit card advances are loans based on previous and expected numbers in your business. These tend to be beneficial for businesses with at least a three-year history of accepting credit cards as payments. You are bound to get a pretty good interest rate on one of the against your expected income based on the estimation of future earning based on credit card sales.
- Factoring - Factoring is an often overlooked but viable option for small businesses is factoring. This is also referred to as receivables financing. You sell your invoices to a third party which means you are paid immediately instead of waiting for your customers to pay up. The factoring vendor will charge you a small fee in the five percent range.
- Lines of credit - If a business somehow finds itself with some cash flow problems, it is recommended that a business gets itself some lines of credit. With a line of credit, don’t get the full amount of the loan but instead you borrow only a certain amount of cash per year. The idea of a line of credit is that you only take out as much money in increments as you need it.
About the Author
Merit Capital Advance offers financing program that provides small businesses with fast business cash. It is a convenient way to get a small business cash advance when you need it most. Visit Merit Capital Advance at http://www.meritcapitaladvance.com/.