Small Business Loans: Popular Sources for Funding Your Business
Small businesses often require financing to maintain their stability in the face of unforeseen difficulties and to stimulate continuing growth. Among the possibilities available are loans from traditional banks, alternative financing, and financing from personal sources. Here are some things to keep in mind when considering these various options for small business loans.
Traditional Bank Loans
Traditional bank loans, especially from credit unions and community banks, are prime sources for small business loans due to their low cost. On the downside, many small businesses find it difficult to qualify for these loans when they need them most during periods of low cash flow or unexpected emergencies.
Loans from the Small Business Administration
The Small Business Administration offers inexpensive small business loans to qualifying recipients. However, these loans require a great deal of time and documentation before approval. Additionally, because they tend to be long-term loans, they do not suit short-term emergency situations.
Lenders that offer merchant advance loans and other types of alternative financing are able to provide small business loans quickly to forestall unforeseen difficulties. Their rates and contractual terms vary greatly from company to company, so it is imperative that business owners seeking loans become familiar with the annual percentage rates and other details before committing themselves to financing from these sources.
Financing through credit cards is fairly common in the small business world. However, personal credit cards are preferable to business credit cards due to their consumer protection. If you use personal credit cards to finance your company, be sure to keep meticulous records of business expenses.
Another financing option is using your own personal savings or loans from family and friends as a source of capital. On the other hand, many people are not eager for their small business financial responsibilities to endanger their retirement funds or impinge upon their family relations or friendships.
For more advice on small business loans, get in touch with Summit Funding Solutions.