When applying for a small business loan there is not a one size fits all model. There are different types of loans for small businesses. A business owner should research these loans and find the one that will best fit their business plan.
Long Term Loans
This is one of the most common types of small business loans to repair bad credit. They can be used for working capital and start up costs. These loans are repaid on a monthly basis. They are usually for a large amount of money. The long term loans usually have low interest rates and are good for businesses with a strong plan for growth and development.
Short Term Loans
These loans have to be paid back in full including interest at the end of a specific term. These loans can be used to replenish inventory or to complete a small business related project. They are usually for amounts below $100,000. These types of loans are good for well established businesses that want to expand and have the money to quickly pay back the loan.
Line of Credit
A line of credit will allow the small business to get money as they need arises. They are similar to a credit card. These loans should be used for temporary financial issues since the interest rates tend to be higher. These loans can be used to expand a business as well. The business will pay back on the loan every month. The sooner they pay it off the more money they will save on interest.
These are just some of the loans used by small businesses. The type of loan will vary based on the size of the business and the reason as to why they are looking for a loan.