All You Need To Know About Business Loans

Finance

Starting up a business requires capital to support initial expenses, which also helps in business expansions. Here comes the role of a business loan.

However, taking a business loan is always not a straightforward process. This article will discuss how to Get a Business Loan New York and other important aspects. 

Read on to know more about it. 

What Is The Definition Of A Business Loan?

A business loan is a tool specifically for business purposes to help with expenses and financial emergencies. This type of loan provides a capital fund that bears the initial costs for a start-up business. 

Apart from that, business owners can take loans to expand their business, buy products or machinery, increase stock and boost production. 

Banks or any financial body sanction loans for start-ups or business owners. The interest rate varies from different banks depending on the amount of the loan and the tenure. Several banks in New York also have specific eligibility criteria, and your business needs to match the requirements to Get Business Loan New York

What Are The Types Of Business Loans?

There are different types of business loans available in New York. The primary six types of business loans are:

  • SBA Loans
  • Term Loans
  • Start-up Loans
  • Merchant Cash Advances
  • Commercial Real Estate Landing New York
  • Business Lines of Credit

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Let us know about these six main types of business loans in depth. 

SBA Loans

The safest kind of business loan is an SBA loan, as here, the U.S Small Business Administration (SBA) provides a guarantee. In this loan, if a borrower defaults, the federal government assures to pay up to 85% of the business loan. It reduces the risk factor for both the borrower and the lender.

Term Loans

Suitable for small businesses, term loans sanctions money from traditional banks, online lenders or credit union. Here the repayment period and the interest rate are fixed. However, if the business fails in term loans, the borrower has to repay with personal funds. 

Start-Up Loans

A business needs to be established for at least a year for a traditional loan. But, in the case of start-up loans, a company with no credit scores can also apply for and sanction money for building capital. However, sometimes it can be expensive. 

Merchant Cash Advances

Here, the loan is sanctioned based on future revenue. The lender typically checks your credit card sales and compares it to the amount you wish to loan. The repayment process is daily and happens via automatic bank draft. The payment is usually a percentage of your daily sales. 

Though this process can offer fast cash even with bad credits, it can also create future problems in business cash flow. 

Commercial Real Estate Landing New York

A commercial real estate loan is similar to a home mortgage but with a commercial property. This type of loan helps to purchase or renovate 

  • office buildings
  • apartments
  • hotels
  • restaurants
  • shopping centres 
  • industrial buildings

The property here serves as collateral. If the borrower defaults on the loan, the lender can sell the property and secure a percentage of the investment. 

Availing a Commercial Real Estate Landing New York is affordable. Some lenders offer low-interest rates such as 3% if you have a good business credit score. 

Business Lines Of Credit

Business Lines of Credit is a type of credit card for business purposes. Like a credit card, a business line of credit allows a business owner a certain amount of money to borrow. The interest rate is only applicable on the borrowed amount, such as in the case of a credit card. After repaying the amount, you can continue to use the credit. 

There are two types of business lines of credit in New York: secured and Unsecured Business Line of Credit New York.

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Collateral is present in a secured line of credit, such as a home mortgage or car. In case of default, the lender can seize the asset belonging to the borrower. 

However, in Unsecured Business Line of Credit New York, collateral is not present and includes a risk factor for the lender. It is complicated to get an unsecured business line of credit for personal and business loans. 

These are the main six types of business loans you can choose from for your business. Research and decide which one serves your purpose and matches your requirements.