Business Loan Key Terms

Know the best type of loan for which to apply

There are many different types of business loans for which company owners can apply. Besides having a good credit score, one of the keys to receiving funding is knowing which type of loan is the right one for your business. For example, if you need early- stage funding, you wouldn't want to apply for a loan with a venture capital firm that only provides late-stage funding. SBA loans can get you started without collateral, but it may be easier to get a commercial mortgage, because the bank can repossess the property if you default on the loan.

 

SBA loans

SBA loans are provided by traditional banks, but are backed by the U.S. government. This means that they are less of a risk for banks, which makes it easier for a new business to get this type of loan. SBA loans also typically come with a lower interest rate than a normal loan.
Try: Learn more about SBA loans through the Small Business Administration, which is the organization that backs them.

Commercial mortgage

Companies use a commercial mortgage in order to purchase a property for their businesses. This could be an office, warehouse or factory, but could also be an investment property, such as an apartment building.
Try: ZeroMillion.com describes commercial mortgages.

Agricultural loans

Agricultural loans allow farm owners to get the money that they need to run their farms, typically to purchase necessary farm equipment. Farmers can often receive government help for these types of loans.
Try: The Alaska Division of Agriculture discusses agricultural loans, maximum limits and what they can be used for.

Disaster loans

If your business has had property destroyed due to a natural disaster, and the costs have not been covered by insurance, you may qualify for a disaster loan. These are backed by the government. You must contact the Federal Emergency Management Administration (FEMA) to see if you are eligible.
Try: At GovLoans.gov, you can learn more about disaster loans.

Venture-capital funding

Companies can get venture-capital funding by trading equity in their businesses for the money needed to get the business off the ground. Venture capitalists are often mostly interested in technological or pharmaceutical industries. Companies should consider venture capital funding if they need millions of dollars.
Try: The British Colombia Ministry of Small Business, Technology and Economic Development offers a good description of venture-capital funding.

Early-stage funding

Early-stage funding, or seed funding, is the money needed at the very start of a company. This could buy necessary equipment or pay salaries to important workers.
Try: The Social Ecosystem discusses some of the methods of early-stage funding.

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