How to Choose Different Types of Business Loans
In Brazil most small business owners have access to different types of loans for companies. From micro credit, cash advance, working capital loan, business finance to loans, equipment loans etc. When it comes to business loan, you have a lot of options.
Traditional vs. Alternative Loans
However, this variety can make the choice of the type of business loan a tedious and boring task for you, especially by the time taste in surveys, comparisons and checks. To ensure that you get the right kind of loan for your company, you must first understand the different options that are available in the market and how they can help your business.
While banks, finance and credit unions used to be the only ones in the recent credit and small business lending game, the financial system scenario has changed dramatically in recent years, especially with the emergence of credit startups and fintechs.
Small business owners, entrepreneurs and entrepreneurs are following the changes and looking for new forms and types of business loans and quick and easy financing alternatives to get working capital cash loans that need less bureaucracy and interest rates lower.
While bank and traditional business loans are still available at most large banks, the requirements to qualify can be difficult for many small businesses – especially those in the initiation phases. Newer alternative options offer greater flexibility in payment and meet 100% fast cash flow needs.
Being able to access the new types of loans for companies and current lenders has been the subject of various congresses and forums aimed at improving the proximity of entrepreneur and entrepreneur with lenders and investors who possess money to borrow with different conditions from banks and financiers.
It is worth mentioning that the process on platforms, websites and marketplaces of loans are much faster, so where a bank can take a few days, alternative lenders make the transaction in just a day or less. There is less paperwork in the approval process, which also makes it easier to complete the deal. “
A variety of options and types of business loans
There are many differences in modalities within the types of loans themselves. The most common type of small business loans is undoubtedly the loan to increase working capital. This option is intended to provide companies with the resources they need to adjust their day-to-day cash flow. This money can be used for everything from stock, expansion and even debt consolidation and advertising contracting.
However, loans and financing for working capital are far from the only option available to small business owners. For example, cash advances (anticipation of receivables) give companies the money they need, but also come with different repayment terms than a common working capital loan. Besides this alternative you will also find Crowdfunding and Peer to Peer Lending P2P.
Many business owners may find this option more suitable for their company as it prevents them from having to make long payments when they are not making enough money.
Equipment leases are also a type of loan. If a company does not have the funds to buy the necessary equipment, it can resort to financing the equipment to obtain it. This option comes with many advantages, and many business owners lease even if they have the funds needed to buy the equipment.
Just like with traditional commercial loans, there are various types of equipment leases to choose from.
Making your choice for a loan modality
Before choosing your loan option, it is important to take into consideration your specific needs. How much money you need, what will be used and many other factors can influence which type of loan makes the most sense to ask for your company.
It is also vital to analyze and compare your options on who the lender will be. Does the lender offer you all the money you need? Does it have fixed or flexible refund options? Is the release and approval fast? Is the documentation simple and straightforward? Does the lender have the best interest rate? Think about all this..
Regardless of your choice and the types of business loans you choose, make sure you plan ahead. Knowing your needs will allow you to avoid numerous headaches and be in a better position to capitalize on other types of financing.