Types of Business Loans and How to Use Them

1. Types of Business Loans and How to Use Them Owning your own business can be stressful, daunting and exciting all at once. When it comes to credit, there are a host of different business loan options you can take advantage of. Identifying these lending options can help you determine which is the right choice for your business in the long run. We have put together a list of the most common business loans for you to consider, along with how they can be used, helping you identify the one that will work best for you moving forward.

2. Term Loans Term loans are one of the most common types of business loan. With this loan you secure a lump sum to the amount that you want to borrow and then you repay the loan over an agreed period of time at a fixed repayment amount. The benefits include the fact you have the cash you need up front and that you can borrow a high amount with fast funding. The negative side is that you may need to have a guarantor and you need to bear in mind that the costs vary from one lender to another, which means shopping around is the best option before signing on the dotted line. The term business loan is ideal for those looking to expand their business and who have good credit histories. SBA Loans Small Business Administration (SBA) loans are guaranteed loans that can be taken out for anywhere from seven years to more than twenty-five years. These loans are guaranteed by the government. The benefit of the SBA loans is that you secure lower interest rates, a higher borrowing amount and a lower repayment amount. The negative is that they are not easy to qualify for and that they have a long application process. The SBA loan is ideal for any small business owner looking to expand their business, refinance an existing loan and who is willing to wait for the funding. Business Line of Credit A business line of credit is a revolving credit instrument where you only pay back the money you use, as you spend it. With this credit, which works similar to a credit card, you are approved for a certain amount of credit, which you can use as and when you need it, repaying what you use. The positive to this is that the business line of credit offers the best in flexibility and is unsecured credit, so no risk to the business assets in the event you cannot repay. The negative is that this option can have hidden costs.

3. This loan is ideal for any business that is looking for a short term or seasonal credit option, something to help them through the quiet winter months, for example. Equipment Loans Equipment loans are the other very popular business loans used by companies of all sizes. This type of loan is matched on the life span of the equipment which offers both pros and cons. The pros of equipment loans are that you own the equipment and you are provided with competitive rates. The cons include that you may have to provide a down payment and there is the risk that your equipment will be out dated before it’s fully paid for. This type of loan is suitable for any business that wants to own their equipment from the start. Personal Loan A high number of small business owners choose to apply for a personal loan as their business loan which offers the benefit of a professional start-up with fast funding. Unfortunately, the personal loan doesn’t come without its share of risk including having a higher cost, offering a smaller amount than a business loan and it can have a negative impact on your own personal credit report in the event you cannot repay. About Us: CalPrivate Bank, formerly San Diego Private Bank, is a leading private bank, serving clients throughout Southern California in the United States. This very well- established bank services high net worth individuals and businesses of all sizes. CalPrivate Bank’s focus is to provide a Distinctly Different Banking Experience through unparalleled service and creative funding solutions for individuals and businesses with complex financial needs. They offer a wide array of financial services, including checking, savings, time deposit accounts, treasury management and related tools. To find out more, visit www.calprivate.bank