What is a business loan?
Small business loans help provide much needed cash flow to keep companies up and running. Getting a loan for your small business isn’t as simple as walking into a bank and securing funds – there are a variety of small business loans to consider, each with its own requirements. If you need a small business loan, keep the following in mind to ensure success.
Small businesses make up much of the American economy. The Small Business Administration (SBA) reports there were nearly 29 million small businesses, as of 2016. While the nature of the businesses varies, many hold one major thing in common – the need for business loans.
Determine your need for a small business loan
Businesses today are at a unique advantage. The business funding landscape is now more varied and accessible than ever before. There are different types of business loans available to meet nearly every distinct need.
There are a few variables to consider when determining the right small business loan for your company. Pursuing a loan should be a strategic part of your business plan. Think about whether a long-term or short-term loan option is best for your needs. If you just need funding to fulfill a large order or take advantage of a one-time opportunity, loans with shorter terms are probably best. If you need to purchase a piece of machinery that will last 20+ years, a long term loan is more cost effective. You don’t want to be paying back a business loan long past the investment’s useful life. Pursuing a long term business loan to purchase new software that will need to be replaced again in five years is probably not the best use for that type of business loan.
Learn more about what business lenders have to offer by checking out our in-depth small business lender reviews here.