Understanding what small business loan is right for your company can be tricky. After all, there are many different options available, each with their strengths and weaknesses. Securing the right type of loan can help your business achieve its goals, while securing the wrong type of loan can be counterproductive.
Perhaps that’s why more businesses are using the Levr.ai business term loan platform to research their loan options and apply for funding. This intelligent small business loans platform uses AI to match applicants with certified lenders. It also guides you through the entire loan application process. Once you share a bit of information about your business, Levr.ai customizes and matches you with the top lenders for the funding you need.
Let’s look at some different types of loans available to your business.
There are essentially two types of term loans: long-term loans and short-term loans. Long-term loans are best for significant investments. They usually have longer repayment terms with lower interest rates. Meanwhile, short-term loans have shorter repayment terms and higher interest rates. These kinds of loans are best for businesses with cash flow shortages or unexpected expenses.
Merchant Cash Advances
Unlike traditional loans, merchant cash advances do not have fixed repayment terms. Instead, a predetermined percentage of each credit card sale is automatically deducted until the advance is fully repaid. This repayment structure provides flexibility for businesses with fluctuating revenue.
Bridge loans are very short-term loans used to ‘bridge’ the gap between a company’s immediate financial needs and the availability of long-term financing. They can be a valuable tool for businesses that require immediate funding while waiting for a larger loan or investment to come through.
Business Credit Cards
Business credit cards provide a revolving line of credit that can be used for day-to-day purchases or larger investments. They often come with additional benefits, such as rewards programs or expense-tracking tools.
Business Line of Credit
A line of credit is a flexible financing option that provides businesses with access to a predetermined amount of capital that can be drawn upon as needed. Businesses can borrow up to their approved credit limit and only pay interest on the amount owed, like a credit card. However, business lines of credit usually have lower interest rates.
Venture Debt Financing
Venture debt financing is a type of debt financing typically offered to startups or high-growth businesses with significant potential. It provides funding to fuel growth and expansion without diluting equity or giving up control of the business.
Accounts Receivable (A/R) Financing
Accounts Receivable (A/R) financing, also known as invoice financing or factoring, allows businesses to access funds by selling their outstanding invoices to a financial institution. This type of financing is particularly useful for businesses that have a long payment cycle or struggle with cash flow due to delayed customer payments.
Choosing The Right Type of Loan Option
When selecting a small business loan, please consider your company’s needs, financial situation, and repayment capabilities. Please also determine the amount of money you need to achieve your goals. It’s best to apply for the amount you need. You should also evaluate the repayment terms to understand your obligations.
With the right loan, your small business can reach its full potential today.