As a small business, you may not always have the capability to cash flow expenses and purchases. This year especially, small businesses have been really struggling to keep their doors open due to COVID-19. Fortunately, there are options available to you in the form of small business loans.
How to determine if you need a small business loan
There are a variety of reasons you may find yourself in need of a small business loan such as “buying equipment or renting space to operate, financing growth of an already proven business, or providing capital to expand.” (businessdictionary.com) Essentially, if your business needs additional capital in order to grow or progress in any way, you may determine you need a small business loan.
Types of small business loans you can take advantage of
Depending on what you need to finance, there are a variety of types of small business loans you can take advantage of. Here are a few examples of small business loans.
Term loan: Term loans are good for well-established businesses in need of additional financing to purchase real estate or equipment. For example, you might consider getting a term loan if the range at your restaurant goes out and you need to buy a replacement, or you are looking to purchase property for a second business location. Term loans require a down payment and have specific interest rates and timelines.
Working capital: Think of working capital as a quick, short term solution to keep your business running until you are able to bring in the funds you need. Perhaps your business didn’t make as much due to it being off-season; you still have to pay your employees, though. In order to pay your employees and keep things running smoothly, you might need some working capital to pay your employees and carry you into the next month.
Acquisition loan: If you need a loan for a specific amount of money in order to accomplish a particular project or to purchase another business, you can get an acquisition loan for your small business. This type of loan is a bit more particular than other loans. With an acquisition loan, you apply for a set amount of capital and express the specific reason you need funds. Once you’ve received the acquisition loan, you must promptly use it for the express purpose outlined in the application, otherwise, it is considered void.
Equipment leasing: When your equipment fails, equipment leasing becomes a great option for your business. Let’s say you don’t have the finances to buy new equipment outright. Instead of making payments on equipment or trying to make your business work without it (which may not even be possible), lease the equipment that you need instead. Equipment leasing allows you to keep doing business as usual and gives you the option to either return the equipment when you’re finished (operating lease) or purchase the equipment (capital lease).
If you own a small business and are interested in learning more about the types of loans you can take advantage of, contact us today or apply now!