Small Business Financing

Written by James McNee
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Small business financing is a necessary tool for most new businesses. A variety of small business loans can be chosen by entrepreneurs to benefit different types of companies. Companies can receive valuable services from lending companies that will lead them to success in business. Choices of small business financing include debt restructuring, lines of credit, SBA loans, and working capital loans.

Small Business Financing Choices

Capital leases for equipment are offered to small businesses by some lenders. These leases are considered to be loans and are treated as installment purchases. Certain lease requirements must be pre-established and met in the lease term. A lease may have a term that is greater than 75 percent of the estimated life of the equipment leased. Another option is a lease that automatically transfers title at the end of the lease term.

SBA loans can be obtained through private lenders and are guaranteed by the Small Business Administration. Advantages include no points, no balloon payments, and longer terms. Companies must meet several requirements to qualify for SBA loans. For example, wholesale businesses are eligible if they have less than 100 employees. Manufacturers must have less than 500 employees to be eligible. In addition, borrowers must have no past bankruptcies or felony arrests to qualify.

The most common types of small business financing loans are working capital loans. Working capital loans have lending terms that are outlined in advance, including repayment schedule and interest rates. These loans can be used for nearly any purpose, including expansion of business, equipment purchases, personal needs, or payroll. Exporters of U.S. goods and services and nationally recognized franchises may receive special loan options with working capital loans.

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