There are many different types of lending modalities for businesses and small businesses, mainly depending on the business sector you are in.
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For example, you borrow $ 50,000 to restore your restaurant and then return 20% of your card charges in the next 12 months to repay the loan.
Cash advance loans often do not clearly state what interest rates because the amount you pay back depends on the card charges, instead there will be fees set at the beginning of the loan and daily charges until the money is refunded.
These are lines of credit to provide commercial loans offered by banks and financial institutions. Your business borrows a lump sum and repays a certain contract term.
Most corporate bank loans require some assurance from those in charge and partner-managers, but there are exceptions. This means that if your company can not repay the loan, the owners will be personally liable for the debt.
A loan from a peer to peer (person to person)
This is a type of social loan, offered by online lending platforms, where you lend money from investors looking for a return on the money lent to you or your business enterprise.
As with bank loans, Peer to Peer Lending lenders may request some collateral when you apply for a loan of this type, however, there is already a model for a peer-to-peer loan that accepts collateral to clear certain amounts.
Short-term business loan
A short term loan for business and business tends to last only a few months, but you could potentially borrow for just a few days as in the cases of overdraft limit and secured account.
Short-term commercial loans generally charge higher interest rates than other more flexible types of loans. Some short-term creditors charge monthly interest, so make sure you know exactly how much the total debt balance will cost before you apply.
Business invoice financing
Invoice financing works slightly differently than working capital funding. Instead of lending money, the lender buys outstanding bills from the startup company with a transaction known as (prepayment of receivables) for a fixed or adjustable rate, releasing the anticipated cash that their customers will pay later.
There are two main types of invoice invoicing:
Factoring: In this mode, the lender buys their receivables and invoices by managing their securities and collecting money directly from their customers.
Anticipated Receivables: Where lenders are banks, factories or even credit card companies acquiring funds before your invoices are paid and you owe the outstanding balance.
Working capital for companies
Working capital financing or working capital financing is designed to help start-up companies and already structured companies pay the costs of the business, for example, pay salaries, inventory, equipment and not to make long-term investments.
What Types of Loans for Beginning Firms?
Of course, entrepreneurs and entrepreneurs find it difficult to get a loan to start their business while still small businesses. But after all, what is the creditor that wants to lend thousands of dollars to a small company that does not even have enough revenue to walk with their own legs?
Keep in mind that once you do not have a well-structured business or for anyone who is just starting out, you are likely to have to borrow money based on your personal finances. In general, this is the most common type of small business startup loan, at least here in Brazil.
Loans for microentrepreneurs, collective financing, angel investors and private groups, crowd funders, loans with friends and family are proven options to finance a business you are starting. Each one has its pros and cons, so make sure you explore all the possibilities of each mode!
However, if you are interested in taking a personal loan or more traditional credit to get working capital needed to grow your business, we have listed three types of small business startup loans that can help you get the money you both accurate.
These three products: equipment financing, legal business credit cards for businesses and lines of credit for companies. All are great options if you have a good credit score and are looking to increase your business credit.
With a type of loan designed for commercial organizations, rather than for individuals, the amounts released by lenders are totally flexible. With a commercial loan you could:
- Borrow between R $ 1,000 to R $ 3 million reais
- Pay the loan about 1 month to 15 years
There are many different types of commercial loans, but all fall into one of two categories listed below:
Unsecured Loans – These loans allow your company to take out cash loan without putting anything in the risk of still using the resources however they want.
Secured loans – These loans allow your business to take cash loans using company assets or staff giving them as collateral. If you do not repay the loan, the lender can sell you to recover the money you borrowed.
“A loan is just a way to make more money to help your business.”
So that you can use a commercial loan?
Almost for any purpose related to your business, including:
- Inventory of materials, products, and purchases
- Hire new employees and collaborators
- Lease real estate and acquire furniture
- Paying debts and emergency expenses
- Buy new equipment and machinery
- Carry out expansion operations
- Use for promotions and dissemination
What kind of loan can start-up companies obtain?
Most companies can get some types of loans and financing, but their options may be limited depending on the business segment the company is in. Check before you register or sign up for any type of credit.
For example, productive microcredit and MEI government funding are only available to start-ups, while many cash advance loans require you to have traded for at least a set period (one year or two) before making the request.
How many loans a startup company can apply for?
There is no set limit for the number of loans that a company can withdraw, but you will need to show that your company can pay for each loan you borrow when you sign up.