Let's get right to it. There are different types of a secured or unsecured business loan. These small business loans Australia, and various countries, has to offer differ in their terms, advantages, and disadvantages. Before you get into one, you should check out a business loan repayment calculator or a commercial loan calculator to make sure you know what you're getting yourself into.
So here is an overview of the general types of business loans:
- TERM LOANS. This is a lump sum loan, which includes interests that you should pay back over a set term.
- SHORT-TERM LOANS. These are similar to regular term loans. However, they are paid back over shorter terms (e.g. 3- to 18- month terms).
- BUSINESS LINES OF CREDIT. These are revolving lines of credit that you can tap into whenever you need or want it. These are provided by online lenders and traditional banks.
- EQUIPMENT FINANCING. The equipment will be used as collateral for this type of business loan. Lenders will finance up to a hundred percent of your new or used machinery's cost.
- INVOICE FINANCING. Companies that offer invoice financing can provide you with quick cash using your business' outstanding invoices as a basis. Usually, you will be advanced 85% of your outstanding invoice and you will be charged a factor fee when the invoice goes unpaid for each week.
- MERCHANT CASH ADVANCES. One of the business loans Australia has to offer are merchant cash advances. Companies offering this type of small business loan will provide you with quick cash. You have to pay it back with a portion of your business' daily debit card and credit card sales. This is usually one of the most expensive types of loan out there.
- BUSINESS CREDIT CARDS. You can utilize your business credit card to finance your operations. This is a separate credit card from that of your personal one.
The Best Loans For Those Who Have Been In Business For Years
If you're business have been around for years, lenders will become more confident to give you their money. The cheapest option would be in a traditional bank, however the process is difficult.
- BANK TERM LOANS. With this type of business loan interest rates are the lowest. You borrow upfront a particular amount of money. Then, you pay it, along with the interest, back every month for a particular number of years.
- BANK LINES OF CREDIT. This is similar to a business credit card. However, it has much lower rates and you can get cash for this type of loan. The bank will extend you with a credit line--a particular monetary amount you have the ability to draw whenever you need it.
Business Loans You Can Search For Online
If you are not able to secure a loan from the bank, you can search for credit online. This will get you to access funding faster and it might be the best option for your business.
- ONLINE TERM LOANS. The same concept is applied to bank term loans and online term loans. You borrow a certain amount of money upfront and you pay the interest and the money back for a certain amount of time. Online term loans are more expensive than bank business loans. However, less paperwork is involved and you can get your money easily in a few weeks, or even days.
- ONLINE LINES OF CREDIT. The same thing applies to bank lines of credit and online lines of credit. There are different options to this type of loan. We have secured lines of credit, unsecured lines of credit, and short-term lines of credit.
If you won't qualify for bank loans, then online options can be your best bet. They also provide you with competitive rates and faster funding times.