So, you have decided that you want to move forward in starting your business. That’s a great first step, but one of many to come. One of the next steps is procuring financing for this new endeavor of yours so that you can have the means to get the business off the ground.
But before you attempt to secure a business loan, there are probably a few basic things that you should know first. Like what some of the terms will look like for your loan. Here are some of the most common terms out there for business loans.
SBA loans are some of the longest terms out there. You are typically looking at five years at a minimum, though there are some options that can extend up to 25 years. It all depends on the type of SPA loan – 7(a), CDC/504, Microloan – that you go with.
If you are looking for a term that can be paid back over a longer period of time, SBA loans are generally available, although there are prerequisites that you will need to check off.
Traditional Bank Loans
When we think of financing, we tend to think of going through the big banks. Traditional bank loans are right behind SBA loans in term, ranging anywhere from 3 to 10 years in length. They are more commonly toward the lower end of the scale.
Traditional bank loans are also quite difficult to qualify for. That said, if you can qualify, you will likely have access to some of the best rates available.
Business Lines of Credit
When you get into a line of credit for business, the rates are generally much higher than they would be for SBA or traditional bank loans. The term is also generally pretty short, ranging from six months to two years. That said, they can go all the way up to five years in length. It all comes down to your individual circumstances and the lender you go through.