In this post, we’ll explain different types of business loans, so you can learn more about the funding options that are available to your business and evaluate which is best for your needs.
Here are 8 of the common types of loans available on Bridge:
- Business Term Loan
A business term loan provides the full approved loan amount to the borrower upfront. The borrower then repays the principal and interest on the loan through a series of periodic payments over an agreed upon amount of time. Term loans are generally given to businesses that need cash to purchase equipment, a building, or any other type of fixed assets.
- Line of Credit
A line of credit is a flexible loan that provides access to a set amount of money. Unlike a term loan or mortgage, there’s no lump-sum disbursement made at loan closing. Instead, the business owner can borrower as financing needs arise, up to the approved loan amount, and repay the principalat any time until the loan matures. Regular payments of interest are paid on principal amountsoutstanding under the line of credit.Lines of credit are most often used to cover the gaps in irregular monthly income or finance a project whose cost cannot be predicted up front.
- Commercial Mortgage
A commercial mortgage is a loan that businesses use to buy, develop, or improve a commercial property. The loan is typically secured by the property. Example properties include an office building, storefront, or warehouse. The approved loan amount of a commercial mortgage is typically calculated on a loan-to-value basis, measuring the value of the loan against the value of the property. The borrowed amount is repaid in monthly principal installments, along with interest.
- SBA Loans
An SBA loan is a loan from a lender in which the Small Business Administration (or “SBA”) guarantees a portion of the loan principal to reduce some of the lender’s risk. The SBA has several loan types, including SBA 7(a) loans, 504 Loans, CAPLines, Export Loans, Microloans, and Disaster Loans. More information on SBA loans and the qualification criteria that can be found at www.SBA.gov .
- Equipment Loans
An Equipment Loan is used to purchase business related equipment. The equipment serves as collateral for the loan. Terms for equipment loans have a wide range that can be anywhere from months to 10 years or longer.
- Accounts Receivable Financing & Factoring
Accounts receivable financing is a type of financing that allows businesses to receive funds up based on the value of accounts receivables (or “AR”). This helps businesses get cash quickly without having to wait to receive customer payments. Factoring is a similar type of financing arrangement but unlike AR financing, factoring involves the sale of a business’ accounts receivable to a third party at a discount.
- Acquisition Loans
A business acquisition loan is a type of financing you can use to purchase an existing business or open a new franchise.
Bridge offers various lending structures that include inventory financing, acquisition financing, leasehold improvements and much more! With 30+ lenders on the platform, if you detail your loan needs in your RFP, we’ll help you find the right lender!