The hope of turning a small business into a larger one encapsulates one’s mind and he/she decides to start a business and turn it into a big one. But to get the business going, the first thing that is needed is the required finance to develop it. Statistics have always shown that 50% of the businesses fail before reaching the five-year mark. Starting a business at your own risk might get you into lots of trouble. So financing through loans is what should be done to avoid risk. There are many types of loans for small business financing and some of the common types of loans are:
• Micro Loans
• Short Term Loans
• Long Term
• Revolving Credit
• Line of Credit
MICRO Business Loans – These are the small loans that are issued by individuals rather than banks or credit unions. These loans can be issued by individuals or a group of individuals contributing portions of the total amount. Often microloans are an efficient tool for people who do not have many resources and are planning to start their own business. Microloans are more popular in the third world countries where the availability of a large business loan is quite less.
Short Term Business Loans – Short-term business loan is the best option when compared to all the other loans. It facilitates businesses and financiers to seize business opportunities that require transactions to be completed in a short interval of time. One of the major features of these kinds of loans is its availability to the requisite business. Another major benefit of a short term loan is it is always available for new and existing business.
LONG TERM Business Loans – What do people do after they have had a good start to their business. The next thing that they think about is leveraging their business to a whole new level. This is where the concept of long term loans comes into play. A business after attaining the required stability is eligible for long-term loans and advances. When it comes to expanding your business that is where long-term loans make an impact.
Revolving Credit – Revolving credit is a form of a line of credit wherein the customer pays a commitment fee and is then allowed to use the funds that are needed. The revolving line of credit can be taken out by corporations or individuals. It is used for operating purposes and can fluctuate each month depending on the customer's current cash flow needs.