Most business owners know that running a business requires, planning, hard work, dedication and education. But even with all of those elements present, one of the main necessities for business success is money. Usually, for a business owner the question is not “Should I get a business loan?” but “What type of business loan should I get?” Finding a business loan that is suitable for a particular business is very important. The right business loan will allow the borrower to get the most he/she can possibly get out of the money that is lent. Listed below are a few types of businesses and the loan for my business that work best for them.
Business Type: Merchant
Best Business Loan Option: Merchant Cash Advance
A merchant business is a business that sells merchandise and/or services. Some examples of merchant businesses are retail stores, restaurants, and automobile repair shops. A merchant cash advance is a purchase of a business’ future credit card receivables, making it the best business loan option for merchant businesses.
Any business that regularly processes credit card transactions can use a merchant cash advance, although a business will usually be required to process a minimum of $2,500 a month in credit card sales in order to be considered for a merchant cash advance.
Merchant cash advances work well with merchant businesses because the repayment is taken as a small percentage of the business’ daily credit card sales, allowing merchants to continue business as usual as their merchant cash advance is repaid.
Merchant cash advances can be used for inventory, advertisement, working capital, or anything else that a merchant business may need, as there are usually no restrictions on how a merchant cash advance can be used.
Business Type: Startup
Best Business Loan Option: Startup Business Loan
The initial costs of starting a business are quite often more than accepted. For this reason, startup business loans can sometimes be a necessity.
When providing startup loans, most lenders will require an applicant to submit a business plan, present a proposal, and provide personal financial statements. Lenders want to know that a business has a good chance of surviving and producing funds in order to repay the loan. And in a worst case scenario, they want to know that they can count on the borrower to repay the loan if the business fails.
Startup business loans grant potential business owners access to a sum of money that will finance or assist in financing the building of a business from the ground up. Starting a business usually takes more than the money saved, raised and scrapped up from friends and families. The startup business loan can fund the initial expenses that businesses produce.
Type of Business: Manufacturing
Best Business Loan Option: Equipment Leasing
Some businesses do not make many credit card transactions, and may not need money for inventory and other costs that merchant or startup businesses may have. Instead, they use lots of equipment in their daily activities. A manufacturing business converts raw materials and component parts into consumer and industrial goods, and therefore requires the use of a variety of equipment.