Did you know that half of all businesses shut down in the first five years of their operation? This is due to a lot of reasons, the first of which is the lack of adequate financing. Small businesses find it harder to survive or get established due to cutthroat competition. Also, at critical times, circumstances become unviable, unconducive, and extremely challenging for small businesses. For instance, the current COVID-19 outbreak has forced hundreds of thousands of ventures to consider layoffs and take other emergency measures.
This situation has given rise to the need for businesses to have adequate working capital, and stay afloat, save their existing assets. Many ventures have turned to their emergency funds, while others have no choice but to borrow a loan. As organizations are running out of time to sustain themselves, they may choose online methods to acquire funds. Unlike conventional means, these are convenient, speedy, and are approved easily.
If you have a business and you are struggling to survive the tide, you may choose from several different online lenders. However, finding the right type of loan to finance your dwindling venture can get difficult. This article will walk you through different available types to assist you in making a better decision. So, let us begin.
- Small Business Administration Loans
The SBA loans are a traditional way to acquire a loan from the government, and it is specially designed to assist small businesses. Since these loans come through a bank, the process may be time-taking and involve usual credit checks. In other words, it may be difficult to qualify for this loan if you do not have a convincing track record.
If you are applying online, you can be sure to receive them in a shorter amount of time, such as a few weeks. An Online Business Loan Apply, therefore, seems to be a feasible option. But before you do so, be sure to find out about any waivers being offered by the SBA because of the pandemic.
- Short-term Business Loans
These are particularly helpful for businesses in the current situation when they require instant capital. A short-term loan is particularly helpful to pay to a vendor or inventory or for covering any major expenses. Those opting for this one have a timeframe from one to three years to fully repay the amount.
If you are still confused about whether you should go for this option, know that it is especially suitable for any of your one-off investment deals. As its name suggests, the application process for this type of loan requires little time.
- Equipment Leasing Loan
While running a small business, you may find it difficult to buy some equipment outright due to limited financial assets. Having your equipment in place for all your business needs helps you keep your work organized and managed. Applying online will let you get the best of the equipment within the minimum of time.
Of course, you can always get the equipment through a conventional loan too. But the leasing method would make your purchase hassle-free and convenient. Moreover, applying online will offer a wide variety of items and allow you to make an informed decision.
- Term Business Loan
If you have a major project at hand, and you are looking for long-term financing, you would like to opt for this loan type. The timeframe for repayment here can go up to 10 years. But this happens when you and your lender have struck a deal, thus deciding the monthly payments.
This type of loan is not just feasible for financing a large project, but also for an expansion, which requires a significant investment in men and material. Understandably, it might require you to meet certain conditions to be eligible to receive the money.
- Business Line of Credit
If you are looking for continuous and consistent access to the working capital, then this option is certainly for you. The capital may include anything related to your operations, such as to pay to your employees or to manage and run the utilities. In this case, you have to draw the money against a certain credit limit.
It can indeed be regarded as one of the most flexible types of online business loans against any potential financial threats. However, it is suitable for specific business needs as described above, so remember to make the right decision.
- Merchant Cash Advances
In the toughening business environment, it often becomes hard to maintain an excellent credit rating. If you are fighting bad credit and want to pull your venture out of trouble, this type of loan is indeed for you.
This financing has comparatively lesser requirements, but it is granted based on the receivables of your credit card. So, if you have been striving to get some loan but find the conditions to be tough, give this one a try.
- Invoice Financing and Factoring
If you have some invoices pending with you, this is the time to use them to get the necessary finances for your venture. It would be better to understand the slight difference between invoice financing and factoring.
In the case of the former, the customer has complete control over the goods, whereas, in the latter method, a factoring company gets a hold of the unpaid invoices as well as the collections.
Borrowing a loan online is a great option to get the essential financing for your venture or organization. Not only this method is hassle-free, but it also allows you to choose between several options. In an environment where businesses are worried about their survival, any delays in seeking funds could invite more trouble and aggravate the issue.
However, it is important to choose an option that suits your business needs, so that you can make the most of it. Last but not least, you must look into the concessions and flexibilities being offered by the government in the wake of the COVID-19 outbreak, so you can be sure to leave nothing on the table.