The modern-day finance market is full of options for small businesses. Now, you have multiple loan and credit products that offer funds in a short time. Many of them do not even ask for a guarantor or collateral.
Hence, if you want to choose a suitable loan option for your business as well, read the loan types below.
Online term loans
The online term loans for small businesses are 100% digitally processed loans for urgent and short-term purposes. This is why applying for funds is smooth, as no guarantor collateral is required. Borrow money as a business owner based on the individual business’s repayment ability. However, the loans come with a smaller loan amount limit, which may vary among different lenders.
- Quick application process – The online term loans are processed digitally. Therefore, the application process is fast. Also, it is transparent as you can always trace your latest status of the loan request. From application to verifying your financial details, then approval to fund disbursement, everything happens online.
- Flexible loan tenure and repayments – The lenders who offer such borrowing options are direct lenders. Unlike traditional loan companies or banks, they are known for providing plausible repayment plans and tenures. It means you can change the repayment plan during the tenure in case you face a financial issue. Also, the tenure can be extended if you are struggling financially or paying instalments on time, and you can demand a tenure extension. Both help in downsizing the instalment size.
- Apply despite a poor credit score – This is amazing that despite your bad business credit score, you can borrow money. However, for that, the current repayment ability of your commercial entity needs to be proven. In that case, it is simpler for the lender to approve your loan.
- Higher approval rate – With so many facilities such as online process, no obligation, acceptance of bad credit, you can get easy approval. With so many features and benefits, the online term loans by direct lenders like Figuralloans have an effortlessly high approval rate.
Line of credit
A line of credit is a financial product that allows businesses to borrow money up to a decided limit. You don’t get an amount in your business bank account. In fact, use a sum of money from the available credit limit. Repay it after using the funds, and that same amount will be available to be used. Sometimes people confuse it with credit cards, but a credit line has a lower interest rate.
- Quick access to money – In case of emergency, you can use lines of credit as your business emergency cushion. Qualifying for a credit line is simple by proving your own and your business’s credit purchasing power. This includes timely paid bills in the recent six months and regular earning potential.
- Revolving credit facility – A line of credit never lets your bank account get empty. You can borrow funds, use them for your purpose, repay them, and the same amount will be available again for further use. Therefore, a specific amount of money is always available. No need to apply for new loans repeatedly.
- Builds business credit – If your business has a thin credit history or even no credit history, taking a credit line builds business credit. However, it is possible in the case of term loans as well. But a credit line keeps providing you with money. Hence, every time you repay funds after using them, your business credit record gets stronger.
- Customization terms – Every business and business owner gets a personalized deal on a credit line. This makes repayments affordable and predictable too. Whether it is the interest rate or available limit, all things are tailored.
- Merchant cash advances – It is an instant business funding method in which you receive immediate funds in exchange for a certain percentage of credit card sales. You can also say that, as per your daily business revenue, you can borrow funds up to a certain percentage of daily earnings. Sometimes borrowers confuse it with a credit card. But it is a completely different product that is cheaper than a credit card, even a secured credit card that puts the collateral under threat if you fail to make the hefty payments.
- No collateral required – As you borrow funds in exchange for your daily card sale, there is no collateral. The daily business earning is the primary factor that decides how much you can borrow upfront.
- Supports business growth – Due to immediate access to money, you can continue the business operations. Hence, there is no obstacle in daily commercial activities as well as long-term business growth. This saves your business from getting into financial trouble.
- No fixed monthly instalment – The repayment amount keeps changing as per card sales. No pressure of keeping a specific amount in your bank account for auto-debit of instalments. This is why, during slow seasons, you don’t need to struggle to keep up with the instalment payment.
- Credit building opportunity – Businesses with a poor or thin credit history find a merchant cash advance an opportunity to build credit history faster. Hence, use a merchant cash advance as an opportunity. Funds can be used for business growth as well as for credit building.
Digital supply chain finance –
It is a FinTech-driven new-age financing solution that helps businesses manage business cash flow across the supply chain. The financial solution uses digital technologies such as AI, automation, and cloud to connect suppliers with buyers. Any kind of financial gap can be handled by it very well.
- Improved cash flow for suppliers – Last-minute urgencies creating a money crisis can be serious if you don’t arrange funds at the right time. Access funds at a lower cost and get working capital with stability.
- Transparency and trust – Due to being digitally handled, the online supply chain finance is a great option if you need a transparent option. Tracking of fund processing is easier and hence dependable.
- Scalability – Handle multiple suppliers, transactions, and geographical locations at the same time. This makes monitoring funds and their uses easier. Ensure optimized use of money in the business for fruitful purposes.
- Stronger supplier relationships – This inspires stronger relationships and more trust among suppliers. They are never out of funds and due to digital funding, they know where the money is coming from and is being used. Suppliers usually have last-minute needs; hence, you don’t need to worry as long as this borrowing option is available. However, different lenders have different conditions considering the varied circumstances and financial conditions of the merchants.
Conclusion
The options above suggest that you have plenty of loan and credit choices for your business. Hence, if you need funds for a short-term or long-term need, choices are available. Whether it is online term loans, merchant cash advance, credit lines, or digital supply chain finance, you have the liberty to choose. Other options like revenue-based financing, equipment loans, asset-based financing, etc., are also available.
The good thing is, all of the loan types are available with personalized deals, even for businesses with poor credit scores. This gives a clear chance of credit score improvement while removing obstructions to business growth.