Business loans can be helpful for companies of varying sizes, whether you are a new startup with two employees or a massive corporation. This loan means ‘borrowing’ money. It can help you pay current expenses or buy new equipment and inventory. You can hire staff or expand your business to cover a larger area.
Business loans provide capital to expand your business without relying directly on income. Like business loans at Navy Federal or non-profit lenders, we offer loans for equipment, capital, and other products that ensure your company will succeed from the get-go.
Figuring out what type of business loan best suits your business can be confusing. That is where we come in handy. We offer an online database and platform that provides easy and simplified access to the largest online lenders.
Take the guesswork out of finding the right business loan. We have compiled a network suitable for entrepreneurs, bankers, investment firms, small businesses, and medium-sized corporations.
Keep reading to see the details of the specific types of bank loans and which one will work best for your company’s needs.
Online Business Loans
Online business loans are short-term loans of 3 to 24 months with higher approval rates than most financial institutions. They can also be completed online, offering more convenience.
- Short-term — 3-24 months, specific short-term projects (buying inventory or boosting an online campaign).
- Long-term — 1-5 years, >$500k, long-term projects
Business loans have many benefits, such as the easy application process, online process, various options to meet unique needs, and flexible repayment terms. Online business loans are often used to get working capital or cash flow for payroll. They are also used for buying equipment or refinancing.
Working Capital Loans
A working capital loan is a type of financing option a business can use to cover operating expenses. It is usually used only for short-term needs. The most common reasons for a working capital loan are to cover payroll, pay off debt, or pay rent.
The benefits of working capital loans are that they are fast and easy to secure and that businesses keep full control of the money. However, the interest rates on this type of loan can be very high.
Business Lines Of Credit
A business line of credit is a revolving loan that offers a set amount of money to the business. It is usually used for purchasing inventory or making payroll. Businesses can choose between a Secured Line of Credit and an Unsecured Line of Credit.
One example of a business line of credit is Navy Federal Business Loans. This company provides short-term cash needs to help combat overdrafts, build inventory, or settle unexpected purchases or fees. Navy Federal offers business loans to help reconcile payments and boost cash flow.
Merchant Cash Advances
A merchant cash advance is a cash advance based on the company's credit sales, offering a quick and short-term solution for capital. Yet, borrowers must be aware that the payback could be upwards of 40% of the initial borrowed amount. The interest rate is high. However, merchant cash advances can help those who need quick capital to get a good deal, discount, or pay a debt.
The pros of a merchant cash advance are fast access to capital and flexible repayment terms. However, companies that use this type of advance should be aware of the expensive repayment terms and necessary credit scores required before applying.
Term Loans
Term loans are similar to traditional loans, offering the business a chance to pay back within a set time frame. Businesses will repay the amount in monthly installments over time, with the interest rates fixed or variable depending on the amount and type of loan.
The benefit of term loans is that businesses can borrow funds at lower rates. However, companies must understand the implications, such as a lower credit rate if they fail to pay back the loan on time.
Commercial Real Estate
Another type of business loan is a commercial real estate loan, which helps you strengthen your real estate portfolio without having to put down all the capital. This loan applies to commercial real estate, family homes, and property renovations.
The perks of this business plan are that businesses can avoid prepayment penalties, choose between fixed or variable rates, and use the loan for purchases, refinancing needs, or renovations. Companies can use the loan for commercial real estate, such as investment properties or renovations.
One of the most renowned credit unions offering this type of funding is Navy Federal. Navy Federal business loans extend to real estate. This allows small and medium-sized real estate businesses to increase and broaden their portfolios without putting down all their capital.
Vehicle And Secured Term Loans
Another very common type of business loan that companies debate about getting is a vehicle and secured term loan that can strengthen business operations. The perks of this loan are that it offers no prepayment penalty, offers purchases and refinancing capabilities, provides up to 75% of the loan value, and gives a minimum loan amount of $10k.
Companies can use this type of secured term loan for improvements, technological equipment, commercial equipment, and expansion.
In addition to a secured term loan, companies can use business vehicle loans to connect their products and services with customers or distributors. The perks of this type of loan are no fees or prepayment penalties. Businesses can use this loan for cars, trucks, or SUVs.
We have a smart solution for companies searching for the appropriate vehicle and secured term loans for their needs. Secured and vehicle loans fall under the overarching umbrella of Navy Federal business loans. This reputable financing institution offers an easy way for businesses to join the Navy Federal Credit Union and apply for their necessary small or medium-sized business loans.
FAQs
Not sure what type of business loan to get for your unique needs?
What Are Five Things To Keep In Mind When Applying For A Business Loan?
When applying for the right business loan, keep a few aspects of your business and personal character in mind.
- Character — Lenders considering giving you a business loan will look at your track record, personal credit history, character references, and former employer references.
- Capital — Those needing business loans will have to offer a certain amount of money and finances to show that they can afford or repay the loan.
- Collateral — Some lenders might need collateral to go along with the capital, such as vehicles, inventory, finances, receivables, or real estate.
- Conditions — You should have your business plan ready when you ask for a business loan. This shows the lender that you have a plan for how to use the capital and how to repay the lender.
- Capacity — Those needing loans should explain how they plan to repay the lender after making money with their business model.
What Are Home Equity Loans?
Home equity is how much you owe on your house and how much your house is worth. If you need a loan to cover your home’s equity, there are a few options.
Individuals can use a fixed-rate equity loan or a home equity line of credit to pay back their mortgage fees. For example, Navy Federal business loans aren’t the only things they offer.
They provide home equity lines of credit and home loans for individuals. A fixed-rate equity loan reduces closing costs and has a fixed rate for the life of the loan. A home equity line of credit means the loanee will pay zero closing costs and borrow up to their maximum credit limit.
Do I Need A Business Plan To Be Approved For A Loan?
Many times, the lender will ask for a business plan to show that you have a plan for what you will do with the money if you were to get it. This often involves how you will spend the money, your long-term plan for the business to succeed, and the type of niche that you want to fit into within the market.
You will definitely need a business plan to qualify for a small business loan. Although other financial institutions might not need a legal or formal plan, they will still ask why you need a loan, how it can help your business, plans for distributing the money, etc.
Will My Personal Credit Score Affect My Business Credit Profile?
Many business owners worry their personal credit score will influence their business credit profile. A personal credit score is a reflection of how someone pays off their debts, such as student loans, housing mortgages, auto loans, or other fees. On the other hand, a business credit profile is the likelihood of a business meeting its financial responsibilities.
Business Loans Designed With YOU In Mind
Do you need help figuring out what type of business loan to use for your business? Well, we are here to help. Business Loans focuses on making the loan-finding process as streamlined and simple as possible. By having all of the reputable credit unions and financial institutions in one place, you can put in your parameters, budget, and let us do the rest.
Get started today to figure out what type of loan can really help your business take off and succeed.
