Business Loans

Life is full of happy moments, sad moments, unforgettable moments, and very unforgettable moments. Life is also full of regrets, some more than others of course. And you know what? There is nothing worse than regrets. Life will never be all roses, nor 100% misery. Some of this is up to chance, however. If you’re reading this it’s likely you’re not living in squalor, born into slavery or a society that deems you a second-class citizen based on your parent’s status. Right there, in a sense, you’ve won the lottery. But regrets on the other hand, regrets are debilitating. The reason why … they are up to you.

Many folks feel comfortable working for a company. There is stability, knowing what awaits, always answering to a boss, but not having to take an exorbitant amount of risk (company owners and/or the Board of Directors do that). For others however, this plain sucks. They want to take risks, call the shots, develop programs and projects and are prepared for the consequences. By the way, the consequences can be debilitating, but again, some are much more risk adverse than others.  

If you fall into the group that wants to strike out on your own once your idea is in place, the next step is to seek out financing. And unless you have a wealthy benefactor, a small business loan is your likely next step. Small business loans give owners access to capital that they can in turn invest in their business. The typical structure is not all that complicated – a lender sets the rate and term limits for repayment, a deal is signed, and the owner comes away with the capital to invest as he or she deems suitable. Now, some lenders will place a restriction on how the money is invested, but for the most part after the borrower goes through all the background checks and is lent the money, the lender is likely OK with the business owner’s credentials and trusts them to invest wisely.

There are distinct structures to small business loans. One of the more common is the term loan, and these are for large loan amounts on average - typically in the neighborhood of $25,000 to $500,000. Repayment term lengths will be anywhere from 1 to 5 years and these types of loans feature relatively low interest rates. When we say low this all depends on your geographic location but think in the 7% range. A short-term loan is another type and works in a similar fashion as traditional term loans. These loans will be shorter than term loans so the interest rate will likely be higher. Hence the title, “short-term.” Be advised that short-term loans will need to be paid off frequently and at a higher rate which is not always ideal for small business owners.

Finally, there exist a plethora of what are known as individualized loans. Many large banks will offer a more tailormade approach, giving borrowers an option that suits their specific need. Regardless of your business and/or idea, financing is crucial. If you haven’t already start to foster a relationship with a future lending entity. You don’t want to end up with regrets!