Starting a business is expensive. Therefore, a business loan can always help you get started or address specific needs along the way. While considering financing options, it’s important to understand the different types of loans available for a startup. So, you can select the best option for your needs. Here are 3 best small business loans for the startup.
Equipment loans
Equipment loans is a great option for startups. You can use the loan to finance nearly every type of business equipment (including vehicles). The reason new businesses can take advantage of these loans is that the equipment secures the loan regardless of the success or failure of the company.
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However, loan rates are often reasonable and vary depending on the age of the individual’s or business’s credit rating and financial picture.
Purchase order financing
Purchase order financing can present a great lending opportunity for startup companies. Especially, those that receive a lot of orders but don’t have the cash to fulfill them. In these cases, similar to invoice financing, the purchase order secures the loan.
Once you have a purchase order, the lender directly pays your supplier to manufacture and deliver the product to the customer. Once delivery made, the customer pays the lender. The lender then deducts their fees from this amount and pays you the remainder, which can be counted as your profits.
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Secured loans
Secured loans are a viable option for businesses seeking the lowest rates. Besides, it also good for those with poor credit ratings who need funding and those who are seeking to repair their credit ratings.
In essence, all small business loans secured by some type of assets. The assets include a history of success, equipment, invoices, inventory and purchase orders. However, for some small businesses, a loan secured by personal property is the only way to acquire financing.
