Putting up your own business requires some hefty capital that is why securing a loan is an automatic option. To finance a startup or a needed capital investment for your growing company, the common choice is a small business loan here in Ogden, Utah.
There are many private lenders to choose from apart from commercial and federal sources like banks and the Small Business Administration (SBA). But are these loans right for you?
Key advantages of small business loans
1. No need to sell your company’s equity
With small business loans, you can avoid selling your company’s equity. Selling equity is a typical way for companies to get the needed cash but with small business loans, you only have to worry about repayments.
2. An opportunity to expand operations
Since small business loans inject fresh capital, it allows your company to expand by utilizing the borrowed money for key operational requirements, whether it be increasing production through new technologies or adding more workers.
3. A source of fund for cash flow issues
If you borrow, you can pay for the salaries on time, and raw materials cost in advance. Businesses do face cash flow problems, and when they come, it is often difficult to find an immediate solution. Borrowing is the best recourse.
Which type of loan is right for you?
1. SBA loan
There are many types of SBA loan guarantees. The smallest is $50,000 while the largest is through the 7a program (for larger firms) reaching up to $2 million. An issue, however with SBA loans, is that it takes time to get a loan.
Microloans start from $1,000 to $50,000 with a different set of terms. These are for startups, expansion projects, and childcare centers. Microloans have a great history of profitability.
3. Bootstrap loan
The most common of all small business loans are bootstrap loans. Such loans are only secured through family or friends, or through credit card debt, so no applications are needed. Although very easy to obtain, such loans can be emotionally risky as relationships can be ruined.
There you go. The most important thing is to choose the right loan for you. Good luck!