For succeeding, small businesses need to acquire the appropriate type of business loan in Stillwater and Hudson. Even a minor miscalculation can land your small business in the defaulter list of a bank in Stillwater, MN, or Hudson, WI. If you need ways to fund your small business, check out the various types of business loans here to know the best fitment.
Types of Business Loans
● Small Business Administration (SBA)loans
In it, SBA provides a guarantee on loan promising to reimburse the bank in Stillwater and Hudson a certain percentage of the loan if you default to pay.
● The 7(a) Loan Program
It is a flexible loan option for established businesses to get funds for working capital, refinancing debt reconciliation loans, and commercial real estate mortgages.
Pros
It has low interest rates and low-extended terms-meaning monthly payments.
Cons
It’s not a suitable loan option if you are looking for a fast loan to exploit a business opportunity.
● The 504 Loan Program
It is a type of business loan in Stillwater and Hudson that helps small businesses get finance for purchasing fixed assets, like real estate, buildings, and machinery, at below-market interest rates.
Pros
Its the appropriate fitment for those small businesses interested in purchasing a commercial real estate property with the public policy goals of the local CDC.
Cons
It requires a 10% cash down payment which might be a financial deterrent for some business owners. For startups or special-purpose properties, this type of business loan requires a contribution of up to 20% of the total project costs.
● The Microloan Program
Microloan program is a type of business loan that helps even smaller businesses(including startups) to acquire loans of up to $50,000.
Pros
It is the best fitment of loans for startups and new entrepreneurs searching for low-priced loan options to grow or launch their businesses.
Cons
You cannot use the loan for repaying debt or purchasing real estate.
● Bank Term Loans
In it, you borrow a set amount of money ($30,000 to $500,000) and pay it back with a fixed interest rate (6.99% to 26.99%) on a specific repayment schedule (2 – 5 years). The interest rate depends on the loan term and your credit/financial profile with your bank in Stillwater, MN, and Hudson, WI.
Pros
It is the best type of business loan in Stillwater and Hudson if you need fast funding. It also requires less paperwork compared to other business loans.
Cons
The interest rates are less favorable than SBA loans, and its short term for loan repayment cuts directly into your cash flow.
● Business Lines of Credit
It’s a type of business loan that acts like a credit card. However, you only pay interest only for the amount you withdraw.
Pros
You can use the fund for reoccurring operating expenses, shoring up cash flow during late customer payments, covering seasonal shortages, paying for unexpected emergencies, etc.
Cons
It is an expensive option if you have a low credit score with your bank in Stillwater, MN, and Hudson, WI.
● Invoice Factoring
In it, you can use your outstanding invoice to get a cash advance from a lender. You can get about 85 to 90% of your invoice amount in advance.
Pros
If you have cash flow problems, you can use the loan to cover your payroll, rent, and other fixed operating expenses.
Cons
You hand over complete control of your invoice to another company, and they can access your financial information.
Conclusion
Always keep an eye on your business finances, fund utilization, and personal and business credit scores. Then, acquire a business loan in Stillwater or Hudson only after determining your fund needs precisely.
Bayport Banks 