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The 3 types of loans you can get as a small business owner

by Contributing Author

Jewish people have always been successful when it comes to business. This is largely due to the fact that they are intelligent and resourceful. But these are the attributes of any entrepreneur. Success isn’t linked to culture or history. You are one of the many powerful Jewish businesspeople. What you need to do right now is borrow money. The only problem is that there are too many types of business loans out there and you don’t know which one is the best for you. In this article, we’re going to talk about the 3 main types of loans you can get as a business owner.

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SBA loan

SBA is an acronym and it stands for small business administration. SBA lending is fairly common, a great many loans being approved each year. This business loan is perfect if you have been in business for at least 2 years and you have a profitable organization. It’s important to stress the fact the Small Business Administrations doesn’t provide financing directly to managers. What the federal institution does is provide guarantee to financial institutions and lenders for the cash, so in the event that you can’t pay, the lender doesn’t lose very much. Taking onto consideration that about 80% is guaranteed by the private loaner, your risks are smaller.

Similar to a home equity loan, when taking auto equity loans, you simply use the value of your vehicle instead of your home and then pay it back with interests. Your equity is the difference between your balance and how much your car is currently worth. In case you have paid off your car loan, your equity would be equal to the current market value of your car.

Term loan

Imagine the following situation: you move to a new location. This means that your organization is doing pretty good. So good in fact that you need a bigger place. But how are you going to come up with the money to pay for it all? Simple: you take out a term loan. This type of financing has a precise repayment schedule and a fixed interest rate. Term loans are provided as working capital. Whether you need to move to a new location or you need to buy more equipment, you’ll find that the term loan comes in handy. In order to be approved for this kind of financing, you have to offer an asset or a property, which will be given up in case you can’t make your payments.

Invoice financing

You’re a successful business owner, so you already have set up an office, you dispose of competent employees and you have the right piece of equipment. But how is your cash flow? You are still required to pay workers and suppliers. Good thing for you that there is invoice financing. Invoice financing is a type of business loan that where someone else agrees to buy your unpaid accounts. This business loan falls into 3 categories: factoring, invoice discounting, and invoice trading. Factoring makes it possible for you to sell the invoices to a financer. Discounting, on the other hand, allows you to use the accounts receivables as collateral. Last but not least, trading is a form of financing that enables you to sell your invoices online.

It’s your job to figure out which best meets your needs. Take into consideration how much time it takes you to raise the cash, the period of time, and the how you are planning to use the money.

Jewish Business News is not responsible for the content of articles provided by contributing authors



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