Small loans are important for firms operating at smaller levels. Their regular operations are much dependant upon the small business loans offered by bank and other lending institutions. The small businesses are mostly sole-proprietorships, so the owner should know about the types of small loans the banks and the companies are offering. There are some options in small business loans that are to be chosen by the small business owners according to their needs.
The types include the short-term bank and credit union loans having a maturity of 2 to 10 years, loans offered by private lenders, and the loans from non-bank lender organizations. But SBA (Small Business Administration), is the best and most friendly loan procedure for the entrepreneurs, because they have a stated lesser interest rate than the normal small business loans. But the qualifications are strict because of interest rates being lower.
Getting a Guaranteed Small Business Loan
It is a guaranteed loan that gives insurance from a government company, i.e. SBA, the company guarantees to repay the loan if the small business company defaults and becomes unable to repay the loan.
Getting a Business Loan with no Money Down
When ever you are having a transaction of a small business loan, the money or the principal is transferred from the lender to the borrower; a cost is charged over the principal amount that is transferred. The cost is known as ‘Interest’. This is basically the money charged for using money. ‘Collateral’ is something that is kept by bank when someone is given loan, this is done because if someone fails to repay the loan, the bank sells the asset of the owner to get ids money back. But this is an annoying situation for the borrower. So, most of the people are reluctant in getting loans because they think that they might lose their personal assets if the business fails.
But the Small Business Administration (SBA), helps the borrowers in getting loans without giving anything into lender’s custody. That is the reason why this system is getting popular by every passing day.