No matter the size of your business, you’ll likely require extra capital at some point in your entrepreneurial journey–whether to boost your cash flow, hire new employees, or scale your business to the next level. There are many business financing loans available, each with its own qualification requirements, interest rates, and terms. The right one for your business will depend on when you need the money and what you need it for.

When you’re ready to apply for business financing loans, doing your homework ahead of time will make the process easier down the line. By understanding all of your options, you’ll be more prepared to ask for an offer that meets your business’ unique needs. It also helps you learn why interest rates are higher for certain high-risk types of loans.

Here’s an overview of the six most common business financing loans, and who they’re best for.

1.) Conventional Loans

Conventional bank loans typically have fewer hoops to jump through than SBAs, with a shorter approval time. They are issued by banks, credit unions, and financial institutions. To qualify for a conventional business loan, you must have a good credit score and favorable business financials.

2.) SBA 7A Financing

SBA 7A Loans are intended for use by borrowers that fall short of approval for a conventional loan. An SBA 7a loan can be used by startup companies, companies that do not have a strong balance sheet, and transactions that do not include real estate. SBA 7a loans will have longer terms and amortization lengths than conventional loans. 

3.) SBA 504 Financing

SBA 504 loans provide long-term financing (up to 25 years) for major business purchases like real estate, equipment, and machinery. Loans are typically capped at $5 million, but some projects can qualify for up to $5.5 million.

4.) Private Money Financing

A private money loan is usually a short-term loan used to purchase or refinance real estate. It’s primarily used for real estate investment acquisitions. Loans can be interest only and terms range from one to five years.

5.) Asset Based Lending

Asset-based lending is secured by some form of collateral such as inventory, equipment, accounts receivable, and other balance-sheet assets. This type of financing is best suited for a business that has assets but lacks the cash flow to expand the business or get through a cash flow emergency.

6.) Equity Investment

Often, especially with a startup, there is insufficient capital on hand to inject into the project. Bringing in an equity partner that injects capital in exchange for a percentage of ownership in the company is a great way to raise capital.

We’ve Been There So You Can Get There

When it comes to getting funding, you’re not in this alone. Independence Business Consulting understands the challenges facing small business owners when it comes to getting the capital they need. We have decades of experience consulting and securing funding for businesses, and our experts are ready to guide you through the business financing loan process. Partner with us to find the best solution for your business.