Are you planning to launch or grow a small business? You will need finances to achieve your business objectives. Different types of small business finance options are available in the financial market. Choose the option that works best for you.
Traditional Loans
These loans are available from traditional lenders like banks. You can borrow a loan easily if you can provide a valuable security like a property. The loan borrowing process becomes quick and easy if you pledge a security like this. If you have been running a business, you can get a business loan based on your current assets and income sources. You have to submit your income tax return and other financial details to borrow this type of loan. A good business track record and credit score prove helpful. You must have sufficient business assets. Lower interest rate is offered on such loans. If you are not looking for a very large sum of money, you can also try options like line of credit.
Government Approved Loans
These loans are provided by the traditional banks but guaranteed by the government. You can get this business loan even if you are unable to pledge a collateral or asset. This option means you will receive favorable interest rate on the loan even when you cannot submit any collateral. This loan can be used to start a new business. The application process is complex and you have to submit different types of documents to get this loan. However, this may be the only option to get a loan at a reduced rate if you are unable to arrange a collateral.
Personal Loans
These loans are small amount loans that can be borrowed on your personal undertaking. Both secured and unsecured loans are available under this borrowing option. It is suitable for borrowing a small amount of money only. Use this option wisely because it carries high interest rate. Borrow it only when you are sure of repaying your loan on time. You must have the earning and income sources to repay this type of loan. It can be borrowed easily if you have maintained a good credit rating. A personal loan can be used for any purpose so you can use it for business purpose as well.
Some new small business finance options have also emerged in recent years. Peer to peer lending is the new addition. It comes with high interest rate but you get to borrow directly from people wanting to earn high interest on their investments. There are some other online borrowing options. Be careful when borrowing through any online vendor. Make sure it is a genuine company, lender or agent.