Short-term and Long-term Business Financing

business_manBusinesses are offered different types of financing, including small, start-up, and franchise loans. The type to choose depends on factors such as sector and industry, amount required, interest rate, and others.

Short-term and Long-term Financing

Companies use business loans for expansion, operation, and acquisition. They can use the funds to finance leasehold improvements, production facilities and equipment, software and communication equipment, and buildings. Applicants can choose from fixed and variable rate business loans. Businesses also use microloans to purchase supplies and inventory and for working capital. The criteria of intermediary lenders and the presence of collateral determine the loan terms. Banks accept assets such as inventory, marketable securities, real estate holdings, etc. There are line of credit loans, angel investment, SBA loans, and many others. Government backed loans are also offered through micro lenders, community development organizations, and others. Businesses apply for loans to cover their short-term and start-up costs . Loans are offered to businesses operating in different industries. Business owners are offered both short-term and long-term financing options. The amount also varies depending on the purpose, i.e. the purchase of equipment, land, or premises. While there are requirements to meet, government loans can be used to renovate an existing facility or construct a new building. The funds cannot be used to pay delinquent federal or state withholding taxes.

As a rule, financial institutions require personal guarantees and some type of collateral. Businesses can apply with non-bank entities, peer to peer lenders, and brick-and-mortar banks. Other options for borrowers include intermediary bank term and short-term loans. Borrowers are asked to present a business plan, forecasted financial statements, and other documents. Your credit score is an important factor in that an excellent score shows to banks that you are a trustworthy borrower. Borrowers with poor credit are risky and have few options available. Some banks also require a valuable asset to be offered as collateral. You can offer livestock and crops, certificates of deposit, bonds and stocks, and other assets.

Other Types of Financing

There are other options for businesses, including grants, revolving lines of credit, loans from friends and family, and angel investors. Personal financing in the form of home equity loans is also used. Angel investors are one option whereby individuals offer capital to new businesses and entrepreneurs. Businesses can choose from disaster loans, small business loans, and other types. Local, state, and federal governments also offer grants.