The Types of Business Funding Available to Business Owners [Part 2]

How to use the Different Funding Options Available for Women Business Owners

SBA Loans

SBA Loans are loans offered through the Small Business Administration and are government backed. You can find terms anywhere from 5-25 years but to obtain your funds, your wait time is 1-3 months.

This loan option is good for businesses who have a month or more until they need funding and have all necessary documents.

Term Loans

According to entrepreneur.com, term loans are standard commercial loans and often used for investing in a business. They often have fixed interest rates, but not always and their repayment schedules vary.

These loans typically have an Annual Percentage Rate or (APR). The APR is the interest rate you pay on a loan over time, it also includes fees and costs that vary with the type of product. The APR is not a reflection of the actual cost of the funds, to determine this, you should use an amortization calculator.

If a traditional loan does not have a fixed interest, it has what is known as a variable interest rate. The rate will change because it is based on an index that changes with the market.

This type of funding option is good for business owners who have 2-3 weeks to wait for funding. It is also a good option for business owners who have established, good or great credit, have a relationship with the bank and are okay carrying the debt over a longer time-frame.

Credit

Most of us know and have used a credit card. They are fairly easy to obtain and there are options for secured cards.

A secured card is a credit card you can obtain by putting a down payment to the bank as your line of credit and the bank reports the card as a credit line. If you pay your balance off or make your payments on time, you will slowly build or re-build your credit. This is a good option if you have filed a bankruptcy and are trying to re-build.

Credit cards and lines of credit usually have a variable interest rate and some even have annual fees. Both funding types are revolving which means you have the availability to draw out more than what you pay back if you need to. Try and always pay your balance as soon as possible as interest charges can get steep and your balances can get out of hand.

This option is good for the businesswoman who typically makes more than she spends. It is also a great way to track business expenses separately from other accounts, making tax season a breeze.

Merchant Cash Advance

Merchant Cash Advance allows owners to access their projected future sales of their business immediately, at a fixed, upfront cost. The terms for this funding allow you to borrow more money once you pass a certain payback percentage in good-standing. Reliant Funding offers this type of option in as little as 48 hours and with terms from 3-15 months.