Handy Loans for Small Businesses

Handy Loans for Small Businesses

Even for the most successful small business, money can sometimes get tight. Whether it’s an industry downturn, seasonal factors, or simply an unexpected slump, good business is never guaranteed. What’s more, as every small business owner knows, even a short downturn can be devastating for an operation.

When times get tough, an extra cash infusion can sometimes save the day, so small business owners need to be aware of the different types of loans that can be essential for protecting an operation.

Read on to learn a little more about some essential types of loans.

1. Lines of Credit

A line of credit can be enormously important for a small business. For those with limited experience, lines of credit are like credit cards: they offer a “line” of funds on which you can draw, up to a certain point, which recharges once the balance is paid off. Lines of credit are typically secured (meaning backed by some form of collateral) or unsecured (not backed by collateral) which can affect borrowing limits and rates.

A line of credit can be an enormously handy way to always have a little extra cash on hand. You can use it to boost inventory, cover payroll, make an emergency repair, or do something else. It’s there when you need it and can be ignored when you don’t.

Plus, steady borrowing and repayment of your credit line can boost your business’ credit score.

2. Asset-Based Loans

Asset-based loans are another handy type of loan for a small business and can also be used to raise quick cash. Asset-based loans are lent based on something you put up for collateral — which at a small business could be a vehicle, equipment, inventory, property, or something else. Once secured, they are typically not highly restrictive. For a potentially large and urgent loan, these can be extremely handy.

3. SBA Loans

Finally, every small business owner should be familiar with SBA loans. These loans are partially backed by a federal agency, the Small Business Administration, and are specifically geared toward supporting small businesses. Different types can help your business in different ways — recovering from a disaster, buying property, starting, or expanding a business, or something else.

Constantly being prepared is essential for a small business, and part of that is being prepared to raise cash. The loans above can suggest helpful ways to do so, whether times are good or times are tight.