Starting a business is both an exciting and daunting venture, but it’s a rewarding process nonetheless. A solid plan and zealous dedication can get you far in your journey, but you need financing options to jumpstart your entrepreneurial career before anything else.
Loans are typically the go-to choice for budding entrepreneurs looking for the right funding to expand their business and pursue new opportunities. However, companies can apply different types of loans, all of which have distinct advantages that cater to your specific needs.
With that in mind, the list below explores different loan types available to entrepreneurs and small businesses:
1. Term Loans
Also known as long-term loans, this is the best choice for entrepreneurs who need massive amounts of funding to kickstart their business. As this involves a lot of money, it’s no surprise that the application process can be lengthy, with only a meagre 25 per cent of bank approvals.
This is often the go-to choice for investing in real estate, acquiring another business, or grabbing opportunities to widen business assets or go for expansion. Keep in mind that you need an impressionable track record of success to minimize the associated risks that come with term loans for lenders.
2. Short-Term Loans
Entrepreneurs who are looking for quick cash to solve any cash flow problems, pay off higher-interest debts, or respond to business emergencies can benefit from short-term loans.
The best part about this is that you don’t need an excellent credit score, plus there is less paperwork and speedier processing since it has smaller risks than term loans.
The drawback to short-term loans is that you will need to pay within two years on either a daily or weekly basis. It also has a higher APR compared to term loans.
3. Equipment Loans
Just as the moniker suggests, equipment loans are perfect for entrepreneurs who are establishing a business and need some further funding to invest in equipment. It’s also quickly becoming a go-to choice for new companies since they can secure this type of loan even if the business venture fails.
4. Secured Loans
For businesses with poor credit ratings, you can still apply for a loan by going for secured loans, which offers one of the lowest rates. This means that you are loaning your assets, including equipment, invoices, inventory, or even personal property, to acquire the funding you need for your business.
The Bottom Line
Starting a business is exciting yet expensive. No matter how much guts, research, and preparation you make to launch your venture, you will always need financing to keep the heart of your business alive and thriving.
With that in mind, the list above shows some of the common loans available to help small businesses get started on the right foot.
If you’re looking for a mortgage broker in Cockburn Central WA to help jumpstart your entrepreneurial career, we’re the best ones to call. Get in touch with us at 08 9417 5550 to see how we can help you!