Types of Business Loans

All businesses need money to operate. In the business world, the money required to maintain operations, purchase supplies, inventory and equipment, and complete other essential functions of business is often referred to as capital. One major way in which businesses acquire capital is through the commercial lending done by banks that specialize in dealing with business needs and loans. Numerous types of loans are available to businesses of all sizes through commercial banks. Commercial lenders know the ins and outs of business, and have programs tailored to best suit their needs.

Start-Up Loans

One type of loan that is often provided to businesses by commercial banks is a start-up loan. This loan gives businesses the capital required to start a business. The loan might be secured by the business premises or by the inventory the business plans to purchase, or it might be an unsecured loan based on the assets and credit-worthiness of the person starting the business. This money may be used to build a storefront, acquire inventory or pay franchise fees to get a business rolling.

Line of Credit

Lines of credit are another type of business loan provided by commercial banks. Businesses need a ready flow of money to keep operating, and with the economic ups and downs, they may have months where they are tight for operating cash, and months where they have plenty of money. A line of credit, secured by the facilities or inventory of the business, allows the business to draw from readily available funds the company can pay back over time and draw from again without constantly going through the loan process.

Small Business Administration Loans

Small Business Administration loans are also dispensed by commercial banks. These are loans made specifically to small businesses that want to begin operations and are guaranteed by the SBA, a division of the federal government. In this case, the commercial banks are the go-between that allows the business to receive the money from the SBA through the financing process. These are a special type of loan and carry certain conditions and restrictions different from normal banking loans.

Small Business Working Capital Loans

In the present economy, it’s nearly impossible for many small businesses to get the working capital they need from banks and other traditional lenders. But without prosperous small businesses, the economy will likely remain stagnant. To combat this paradoxical situation many find themselves in, National Funding has developed unique financing opportunities for small businesses in the form of working capital loans.

Loan against property 

A loan against property (LAP) is exactly what the name implies -- a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property's market value, usually around 40 per cent to 60 per cent. Loan against property belongs to the secured loan category where the borrower gives a guarantee by using his property as security.